It seems that when Google first launched the USB, it seemed as though it was possible for users to connect USB devices to it, such as keyboards, mice, game controllers, and even flash drives for those who are going the cheaper route by buying an 8GB model and supplementing it with a USB flash drive. Now it seems that Google has quietly updated the Nexus 4 support page, which now reads that keyboards, mice and gaming controllers can still be connected to the Nexus 4, albeit via Bluetooth, and that USB is not supported for connecting such devices.
Some are speculating that this could be a software issue and that Google might have chosen to disable it, or there’s a bug that needs fixing, but considering that the other Nexus devices have USB OTG support, it is possible that it could be a hardware issue and that Google might have opted out on it in order to keep costs down. After all given the price that Google is offering the Nexus 4, we wouldn’t be surprised if some cuts had to be made in order to maintain that price point. This might not be a big deal for some, but if you were counting on supplementing your Nexus 4 with a USB flash drive, you might want to rethink that decision.