“We think there is strong reception of AAPL’s new iPhone 3G Gift Card program,” Wu wrote in a report to clients Wednesday, “where the process of giving the iPhone as a gift is greatly simplified without the need for activation and personal information. … We estimate several hundred thousand to one million units could be impacted.”

That’s Kaufman Bros. analyst Shaw Wu commenting about Apple’s iPhone Gift card prospects as reported by Fortune.

The article continues to explain the upside of gift cards for Apple (more cash) and the downsides (the recipient probably won’t activate the gift card until after Christmas). For Apple any gift card sale is a good news and an unactivated gift card sale is pure awesome (more on this later).

Will people really be buying these things up and giving them as Christmas presents? First off, unless you’re buying a Chris Howard a gift card for vegemite there’s a no way to know if the recipient is really going to use it. This is doubly true with the iPhone. An iPhone gift card is kind of like giving someone a puppy, you save them the expense up front but they end up spending way more on your “gift” than the initial cost over the long run. You’re better off giving cash. As one comedian put it: Gift cards are like taking money that is good anywhere and making good at only one place. Except when that guy said it it was actually funny.

So there is a good reason to suspect that there will be plenty of unactivated iPhone gift cards if the things fly off the shelves. And this great for Apple. Gift cards expire after a certain period of time. If you’re in the know you call this “breakage” and it means (if you’re Apple) you get to keep the cash without providing anything in return. Yippee for the bottom line.

All that said an iPhone gift card would be a great prize for a contest on iPhone Matters. Not saying it will happen, not saying it won’t but if there was some interest in that kind of promotion it would make it that much more likely. On the other hand if everyone reading iPM already has an iPhone a different kind of contest is in order.