We've heard about it in the past. A "Facebook Phone", which was reported on by a handful of news sources. One even said that Facebook is working on phones with INQ Mobile to create handsets for carrier AT&T.
According to rumors, they will have a strong emphasis on social networking functionality, and will be based on the Android operating system.
Zuckerburg himself has decided to chime in on the matter, and danced around the idea of a mobile phone with a strong emphasis on Facebook features:
When you get into the definition of what building a phone is, there are all these different things, which I think is the grey area, where, actually, sometimes even people internally refer to stuff as ‚ÄòFacebook phones'
I know if we were going to build an operating system, then we wouldn‚Äôt have anything to talk about for 4 years. And I know we didn‚Äôt start 4 years ago, so I know we‚Äôre nowhere near anything on that. What I can say generally is that our goal is not to build an operating system from scratch, or else not to design hardware from scratch. Our goal is to make it so that we can design the best integrations in the widest variety of phones
Here's more on the rumored "Facebook Phone": Reasons it may be a reality