The best option is to not leave a gap in the market for other manufacturers to exploit.
The gap between the iPhone and the iPad created a niche for other manufacturers to jump in. Sure at first the poor battery life of early android versions prompted a larger phone to accommodate a bigger battery, but lo! Some people, particularly people that liked to use their smartphone for activities other than phone calls actually liked the bigger screen.
Apple successfully used the multi model option for the iPod to keep out competitors, but did not for iPhone. I suspect this was Steve Jobs.
And it left a gap. Ideally, all screen sizes would be accommodated. 3.5 4.0, 4.7, 5.5, 7.9, 9.7, 12.
No gaps.