"Inside source" where exactly? PC World? McDonalds? Apple? Asda? You can't make a statement and not back it up with fact, that's just speculating.
I can't see physical buttons being completely scrapped from the new device and replaced with gestures, what happens if the device locks up; there needs to be a way to reboot it? Gestures will come to the new iDevice but what they will be or do I've no idea, but four or five fingers is far too much for an iPhone screen.
P.S. The first letter after a full stop should be a capital.