The little big story about iPhone production is that, at least according to analysts for Barclay's Capital, various Far East sources claim that Apple has doubled the iPhone production for the current quarter. The interesting part is that no word about the models being produced is out, so let's speculate for a while, shall we?
We all know the iPhone 3.0 software is coming up, so making more old iPhones doesn't really make sense, especially since sales won't go up instantly that much. On the other hand, building new iPhones is a good idea, because serious stocks will be needed when the new thing comes out.
According to previous reports, iPhone production is expected to jump from about 3.5-4 million units to 8 million, so the new iPhones will probably go to China, as expected...or Apple has a very smart advertising campaign for the rest of the world in mind! ;)