Headphones are always analog. The iPhone is always digital. Somewhere inbetween there is a DAC (digital to analog converter). Currently there's one in the iPhone or you can choose to use an external DAC plugged into the lightning port.
If they remove the DAC and 3.5mm hp jack the customer loses vast functionality and connectivity and gains nothing.
+1. I would rather the DAC be internal so I don't have to have an external one for my wired headphones, or face the more limited choices of headphones that have a proprietary lighting plug instead of an industry standard 3.5mm plug.