While having a 3.5" model and a 4" model makes a lot of sense IMO, perhaps the issue is app developers having to make sure their apps fit two different screen sizes.
I think Apple will bump up the screen size to 4" for the next iPhone. The only question becomes when that is going to be unveiled. My gut says this time next year. Next summer feels too soon and I think Apple is going to transition now from summer releases to the fall. Makes sense with the holiday sales, etc. Also I think it's very safe to assume that Apple will redesign the iPhone for every two generations. 3G - 4. 4S - 5.
I think Apple will bump up the screen size to 4" for the next iPhone. The only question becomes when that is going to be unveiled. My gut says this time next year. Next summer feels too soon and I think Apple is going to transition now from summer releases to the fall. Makes sense with the holiday sales, etc. Also I think it's very safe to assume that Apple will redesign the iPhone for every two generations. 3G - 4. 4S - 5.