Telephone companies in many countries charge much more to call mobile phones than landlines, and people who talk a lot might not want to pay for long calls on their cellphone contract. For example, I live in France, and I can call landlines in more than 100 countries for free. But to talk to a friend in England on a cellphone, I have to pay about ¬10 (around $13.50) an hour, which means that long conversations are expensive. (This is why Skype is so popular in Europe; unfortunately, Skype calls tend to drop often over a cellular network.)
If Apple wanted to go a bit further, the landline iPhone could also handle FaceTime, though this would require a faster processor and graphics processor. But this would be the perfect "grandparents" phone for people who want to have video chats with relatives. It would be much easier to use and set up than an iPhone--it wouldn't need to be activated, and there are fewer settings and options--and could be sold cheaply enough to be competitive.
Some businesses might want to use it too. They could provide access to a central directory of contacts, and if the device could interface with a PBX, it would be usable in all types of companies.
A landline iPhone could be an interesting element in the Apple ecosystem, too. It would connect with existing devices, reinforce the use of iCloud, and provide a low-cost entry to the Apple world for people who may not have iPhones. (In fact, Apple clearly considered such a product at least once before; images of a prototype circa 1983 have long since surfaced online.)
There are plenty of rumors about Apple releasing a cheaper iPhone, and any such phone would have to make compromises of the kind I mentioned above: CPU, flash storage, display, etc. So why not a landline?
Sign up for CIO Asia eNewsletters.