I'm wouldn't be so sure of Apple's phone pipeline... The iPhone4 is still high spec and without much competition. Why not sell as many as possible then drop the next one at a better time?
They discontinued the iPod Mini when it was the highest selling music player in the world. I don't think they let sales stop them from replacing a product.
It makes one wonder whether they'll stick with the existing once-a-year update schedule. Or, even if they do, maybe the next upgrade will be like the 3G->3GS jump or even less... maybe just double the storage across the line? I don't imagine they'll change the body style significantly for a while yet.