iPhone 5 makes perfect sense if you actually stop and THINK about it!
Look at this chart (Is it considered a chart? Table? Who cares just read it):
1: iPhone - Original model (First Gen)
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2: iPhone 3G - Redesign, whole new internals and loads of new features (Second Gen)
3: iPhone 3GS - Some slightly upgraded internals; handful of exclusive features ("Third Gen")
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4: iPhone 4 - Redesign, whole new internals and loads of new features (Fourth [really 3rd] Gen)
5: iPhone 4S - Some slightly upgraded internals; handful of exclusive features ("Fifth Gen")
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6: iPhone 5 - Redesign, whole new internals and loads of new features. Continues with a good consistent set-up strategy that started with the iPhone 3G (Apple could have very easily decided to go sequential with the iPhone 3G; YOU don't know if they did or not).
OR:
6: iPhone 6 - Redesign, whole new internals and loads of new features. Imcomplete pattern. The masses and media will wonder "Wait, what about the iPhone 5?" (Fun fact: A good amount of consumers think that the iPhone 4S is still the 4th generation/don't know about the "generations" in a whole).
Face it, the 3GS and 4S are just REVISIONS. When Apple upgrades the iMac line or the MacBook Pro line with faster processors and a couple of new things, do you go and call it the next generation MacBook? Whenever a car maker (Like Mercedes-Benz) gives their car a facelift, does that mean it's a whole new generation? The 3GS and 4S are just internal facelifts to the 3G and 4. That's ALL they are. Is it logical to call the 6th generation iPhone the iPhone 6? Yes. Is it practical for the market? No, not at all.