The issue is Apple is stuck in defending their decision(s) when it came to the 3.5" screen and now the 4" screen. The simple fact is users do want diversity in screen size and that is what other OS platforms offer. Regardless of whether you like it or not people do leave iOS for other platforms (as I did leave and do return to iOS) because they want something that Apple doesn't offer, screen sizes larger than 4".
Apple should really focus on a low cost phone model like they do with the iP4, and have the 3.5" and a larger size, perhaps its 4", but maybe it should be 4.5 or 5". To remain competitive and to keep market share growth and stockholder happiness they should meet the demands of their users, they are the ones who buy their products after all and without them Apple's stock will certainly continue to drop.
I liked the 4" but would like a 5" screen even more.