We must say that we were rather baffled by Google’s decision to offer an 8GB version of its upcoming Nexus handset, but if the latest round of rumours proves accurate, it could make sense.

Apparently Google plans to offer the LG Nexus for just $399 directly via the Play Store. That sounds like very tempting price point considering the spec, so Google was obviously forced to pinch pennies and save a few bucks by shaving off some storage. Bear in mind that Google started selling the Galaxy Nexus for $399 on the Play Store six months ago.

It also makes us wonder what sort of pricing Google has in mind for 16GB and 32GB versions, although we are still not sure whether the latter will be available at launch. If Nexus 7 pricing is anything to go by, Google might ask for a $50 premium for the 16GB version, but even at $449 it still sounds like a very nice deal for a contract free phone with such an impressive spec.

It is still unclear how Google plans to brand the new phone. Some sources claim it will end up with the Nexus 4 brand, while others still expect it will be called LG Optimus Nexus.

Of course, pricing rumours should always be taken with a grain of salt, but if Google is indeed planning to roll out a $399 device, it has the potential to transform the high-end Android handset market.

More here.