Beer is amazing, without it this never would have happened.
Someone dropped a prototype iPhone in a bar, it was picked up and found it's way into the hands of the kids over at Gizmodo (who may have even paid to get their mitts on it).
While it was active for a little while and able to be used, eventually it was remotely locked (possible via MobileMe). Gizmodo still took it apart and checked it out.
It has a removable battery and it's ugly, but then again it's just a prototype. Were it me, I would produce a product and improve the battery life simultaneously. This would mean, internally, the battery would be removable as the developers could be told, "Make the best battery for X-amount of space," and it could be tested in the prototype devices.
Form is important to customers, function is important to engineers, if the guy who lost it was an engineer, then this new iPhone 4 might be the new components in a 'temporary' casing.
Regardless the hardware is interesting, and my assumption is the WWDC (which has yet to be scheduled) will either come right away, or be postponed to let Apple pack a bit more into the soon-to-be continual best phone in the biz.
http://gizmodo.com/5520164/this-is-apples-next-iphone
UPDATE: Gizmodo has since released an official letter from Apple requesting they return the device; basically admitting it was real all along. This is an amazing little tech story that you might just tell your little four-eyed grandchildren about, if you can meet a girl who agrees to hang out with you...
http://www.macrumors.com/2010/04/20/apple-demands-prototype-iphone-back/
