The Apple strategy for penetrating new, fast developing markets, which resulted in a great success for ipod line, always was "start from high end".
As you can see on ipod line, it started from most expensive ever iPods, then gradually cheaper models like iPod mini and iPod nano and iPod shuffle were introduced. At final stage, iPod touch (actually a brand new device with a brand new iOS, not iPod OS) was introduced, a new premium model. All segments of the market were covered as a result, competition was beaten, Apple triumphed. It took approximately 3-5 years to introduce cheaper iPod models to cover fully the low end segments (which means it took 3-5 years to saturate high end market).
For iPads, the high end saturation period came last November or roughly 2.5 years after introduction of the first iPad. At this stage, mini came and began to successfully cover low-end segment with its smaller screen and slower processor (but extremely well designed and built).
For iPhones, it seems that saturation period took same duration as for iPods: approximately 4-5 years and we are close to witnessing first low end iPhone, similar to iPad to cover the missing segment. Historically that role was given to previous generation models such as iPhone 3GS and iPhone 4/4S when newer models were introduced. However, that iPhone strategy no longer works because for iPhone 5, new size 4 inch was chosen.
If iPhone 5S or 6 comes with similar size, it means that it can't be really a distinguishing feature, because 5S or 6 with 4 inch itself is becoming relatively small sized among 4.8-5 inched models. Therefore, the 4 inch model must become the new cheaper model, while we will see introduction of new 4.8-5 inch models as real premium models. I don't think that resolution will change; it will stay as Retina for 5, but just physically the very small pixels will be slightly enlarged still having one of highest resolutions on market. So for games, there is no difference but for web browsing an obvious advantage of a larger screen.
Therefore, I think we going to have
4.8-5 inch model
4 inch
3.5 inch
4 inch being budget model.