Trolling aside, I do believe the iPhone 5 and 4 inch screen was without a doubt a reaction to the Android market and the increasingly larger phones. Apple will react again at some point, whether it be 4.5 or 4.7 inch screen, but for me personally it might be too late.
I LOVE all of my Apple products, I have a Macbook pro which couldnt be pried away from my hands. The iPad is awesome. I want a bigger phone though, and the only thing keeping me with iPhone for the time being is the ecosystem, however I'm constantly looking into all that would be required to switch platforms and I have to say I am close to the point where a new state of the art Samsung phone in the ~5" range would be seriously appealing to me. I'm close to switching, and can't imagine that I am the only one.