I don't think Walmart will do a $99 iPhone. But this does seem like a strange paring for the iPhone. I could understand the iPod and even iPod Touch, but the iPhone, I guess they do sell AT&T phone there though.
Apple has never really been one to sell anything at a discount to any other store that sells their products. For example a MacBook Pro is $1999 at the Apple Store or at Best Buy sometimes you can find stores like MacMall selling them for a slight discount but they usually try to get you with a bundle.
I highly doubt the Apple image would want to be associated with Wal-Mart selling a cheaper phone then the Apple Store or AT&T sell. I would see this as a rumor and nothing more then wishful thinking. You will probably be able to get it at Wal-Mart if they sell it for $199.74 where you can get it at the Apple Store for $199.99.