Google doesn't deny GPhone rumors, has prototype ready?

[Thanks, Omar A. and Ala A.]
Read - Google sidesteps mobile reports
Read - Google shows phone prototype to manufacturers


Number of applications downloaded from the iPhone App Store
After hitting a historic 1 billion downloads, Apple says the store cleared another half a billion apps in the following three months.
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So, what does this mean for nice google apps on the iPhone from ever happening.
I would speculate that it wouldn't mean much for Google Apps with other phones. Google is a search engine company that makes the majority of their money from advertising therefore it makes more sense for them to have apps on multiple platforms. (iphone, treo, blackberry, ect.)
Google could very easily do what Danger and Apple is doing - though they have somethign neither do not: infrastructure that has proven itself for years.
If they can manage to sync everyones info on a personal account and create a safe haven for it (never lost, like Danger) and provide an interface as slick as the iPhone (but "better") then you have something neato. Noe lets see the friggin thing already.