So Google might actually come out with a phone according to Engadget.
"The device itself, which measures about 3 by 5 inches, sports a touchscreen, navigational controls at the base, and a full swivel out keyboard. When swiveled the screen goes from portrait to landscape mode, but unfortunately that's the limit of info on the actual hardware. The software apparently has "time-sensitive" touch controls that expands your area control the longer you touch. Icons for your most important apps--which are apparently email, text documents, and YouTube--are lined up across the top of the screen. There's also some fancy stuff under the hood to keep an ongoing browser session open to speed launch times, and the browser downloads large files in stages to speed delivery."
The phone might be coming out as early as the second half of next year.

[Engadget]