Well it seems that it has been pretty much confirmed that Microsoft will be launching a Zune Phone at the Mobile World Congress (Feb. 15-18 in Barcelona). According to a report on Gizmodo, a Spanish source (here) has confirmed that MS will make this presentation, and states that it will sport a 480×272 screen, HDMI out, and weigh 70 grams – pretty much a Zune HD with a phone feature.
The Zune Phone is also speculated to continue using NVIDIA’s Tegra, which means some nice performance on the graphics side of things.
I just wish there was Zune service in Canada (the Zune HD never even made it to market here).