So I got my iPad Mini and after just a few hours use then I'm fully convinced that we need an option for a bigger iPhone!!!! Im not saying replace the current size, but give an option for a 4.3-5" screen for those of us who recognize the benefits of a bigger screen.
The things most dramatically improved for me is typing and reading (which are the things I do most on a smartphone).
Typing: Bigger keys means less typos so I'm able to punch out emails without constantly doing corrections.
Reading: My reading workflow usually involve a lot of rotating and zooming to find an optimal reading size so a bigger screen naturally addresses that issue.
Music/Video: The big excuse for mono speakers in iPhones has always been size. The Mini is big enough to house stereo speakers which I feel does improve the media experience quite a bit.
Phone Use: Even though its easy to make fun of people who use gigantic phones, I held my Mini up to my ear and due to the weight then it didnt "feel" as silly as it looks so I'd easily get over it.
I know the big selling point of the 3.5/4" screen is one-handed use but with Siri and the fact that I dont text-and-drive then I dont find many situations in which I MUST type with one hand. So the iPad Mini has convinced me that a bigger iPhone would work out fine. (Just as long as they keep the smaller ones for those who want it)