Sane minds have prevailed. Pictures at Engadget show that (at least one version of) the Motorola iTunes phone is indeed a white E790 and not the aesthetically-challenged Xbox phone.
More pictures of the phone are posted at the Hebrew language forum, Pocket.co.il.
[Update 2005-07-04]
Apparently, Pocket.co.il claims the phone will be called the "E1", but details are otherwise scarce.
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