found some pictures from ITOCP which are meant to show the Radeon HD 3690, although this is the first we've heard of such a product, it does seem like a feasible product.
In a nutshell, the 3690 is a 3850 with a 128-bit memory interface, which is something that ATI has done with other products in the past. It makes sense to use GPUs that don't meet the speed grade of the 3850 into something cheaper and this seems to be the case here.
We have no idea if this will be a widely available product or if it's even intended for markets outside China, but the estimated retail price is meant to be US$110.
You can find some pictures and more details here