Sources inside Apple report a possible future contract free, home activation option and model refresh for iPhone 3G, according to AppleInsider.

When the 2G iPhone first launched Apple used a home activation process which allowed users to activate using iTunes on their home computer. Unfortunately, this has changed for the new 3G iPhone since the phone is now heavily subsidized by AT&T and they want to ensure purchasers sign the carrier's 2 year contract.

It seems as though this process may soon be changed. Apple Store retail employees have reported a new "Home" option appearing on their EasyPay systems when making an iPhone 3G sale.

Previously, the options presented were:
1. Upgrade/Swap existing Phone
2. New to AT&T starting a single line
3. New to AT&T starting a family line
4. Add a line to existing account

The new fifth option for home activation isn't yet working; clicking it will reportedly result in an EasyPay crash.

It is possible that the introduction of home activation and a new unlocked price may come via a product refresh. Last year, Apple dropped the 4GB iPhone model in September and added a new 16GB model in February 2008.

Retail sources are now reporting inventory shortages of the 8GB iPhone 3G, which might signal its cancellation and hopefully an introduction of a 32GB model to match the iPod touch.

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