The Rumors Are Confirmed, Google is Making a Phone.
Amit Chowdhry | Thursday March 15, 2007 | 4,037 viewsIsabel Aguilera, Google’s Spain and Portugal chief executive had admitted that there are 18 research and development initiatives taking place, one of them being mobile-related. The phone is expected to be a touchscreen and not have any buttons. The phone is also expected to integrate Google Talk into its operating system as well.
The statement about Isabel Aguilera was made on Noticias.com. I found this information via Engadget. And lastly, below is a suspected screen shot of the device:

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