The Desire is a spectacular handset, but with premium performance comes premium pricing. That's probably why Telstra have decided to launch the LG Optimus, a smaller cheaper Android powered handset.
The Optimus ships next Tuesday with Android 1.6 installed, although Telstra have said that LG expects to upgrade the phone to 2.1 around September. The phone has a 3-inch touchscreen, comes with 2GB MicroSD card (upgradeable to 32GB) and a 3MP camera will both take photos and MPEG4 video at 15fps.
Because it's a Telstra phone (exclusive for the first few weeks), expect to find shortcuts to Telstra services all over the phone, including Sensis and mobile Foxtel. But for $0 up front on a $49 cap plan over 24 months (which includes 200MB of data), or $504 outright, it seems like a pretty basic entry-level smartphone.