Because in many online surveys, about 70% of the people indicate that they want a screen bigger than 4" on the iPhone (Personally, that's why I'm not upgrading from iPhone 4 either, I'm waiting for the 6). Now, many people are perfectly happy with the current size due to its portability benefit or their hand size. But it would be better to have screen size options (something like 4.5 inches) just like how the Macbook Pros have different screen size options. Believe me, many people move to Android just because of the screen size. Ask yourself, why do people use iPad or iPad mini? Because of the big screen size. A bigger screen means you can do more things, developers can make better use of the screen estate, etc... Why did Apple release iPad mini? For more choice.
A little bit of choice is always better. With choice, its easier to find the sweet spot for yourself. Now, iPhone 5C is giving us choice, but unfortunately, it doesn't deserve the price it is at and it's basically an iPhone 5.
Sometimes I think Apple knows they should have released an iPhone with a bigger screen size this year (along with the current 4" 5S) but it seems they're almost afraid that they won't be able to make something much better next year. So they're leaving the screen size for the iPhone 6 next year, which maybe the single most important feature of the iPhone 6 (also, a bigger screen would allow more room for battery, NFC, bigger camera sensor, thinner design, smaller bezels, etc...)
