A report from the Telegraph said that Apple, Inc. (NASDAQ:AAPL) will likely be reducing the price points of its existing iPhones when the sixth-generation iPhone 5 is released later this month. It added that the third-generation iPhone, the iPhone 3GS, may be removed from the market after the sixth-generation device arrives at retail stores.

The Telegraph’s unnamed sources said that Apple will be getting rid of the three-year-old iPhone 3GS once the iPhone 5 becomes available.

As a result, the iPhone 4 would become the free contract phone, while the iPhone 4S may be assigned a subsidized price point of about $99 or $100. This would pertain to a rumored 8 GB version that may be announced together with the iPhone 5 and all its possible variations.

This would be analogous to Apple’s existing business plan, wherein the company offers the three most recent iPhones, with the oldest one coming free with a two-year wireless carrier contract.

This new set of rumors does go against some recent market analyst predictions. Jefferies analyst Peter Misek once said that the iPhone 3GS may still be sold in developing or emergent markets – currently, its 8 GB version sells for $375 without contract in the United States. He forecasted that Apple may offer the iPhone 3GS in these countries for an unsubsidized price of $300 in US currency.

Also, Eugene Munster of Piper Jaffray had recently predicted that there may be a chance a contract-free $200 iPhone may be available as early as next year.