Linksys, the Cisco Systems-owned company that is synonymous with home and business networking, believes it can leverage its position with wireless routers to become a major player in the emerging VoIP market.

On Tuesday, the company unveiled the iPhone, a consumer product line that allows people to easily make IP telephone calls, according to this Web User post.

The Linksys iPhone family consists of seven VoIP handsets, which allow you to make free or cheap calls over the internet. Notable features include real-time contact list access that lets you know if the intended call recipient is available, integration with Skype and Yahoo Messenger and–in the most advanced model, the Wireless-G Phone WIP320–the ability to make calls on the move via Wi-Fi hotspots with no need for a PC.

And the phones are sleek. The traditional cordless setup, with a bay station and handheld unit, should make it fairly simple for consumers to understand, and the integration with the wireless router will obviously make the technology work seamlessly for most people.

But it wasn’t the debut of the new phones that caught everyone off guard. There were two eye-popping developments. The most obvious is the name iPhone, which many believed would be the name of Apple’s new VoIP product–one that is expected to be introduced at MacWorld in January. The less obvious development is the music and video streaming capabilities that come native to iPhone Wireless-G IP Phone with Web Browser WIP330–features that would make it a direct competitor of Apple’s music-phone hybrid.

While there was a brief media drama about the Linksys product’s name, the real story will be what type of competing products wireless and traditional phone companies create in an effort to attract more customers. As that happens, smart-phone providers such as Palm may face increasingly stiff competition, making it likely that the company will experience many more “down” quarters than normal. After all, if IP-based phones become the norm, it’s likely that many of the Web 2.0 software applications, such as Google Calendar, or contact-list applications, such as Plaxo, will migrate to the mobile arena, which would render Palm mostly obsolete.