This business is getting ridiculous, and I don't mean the iPhone 5S.
I mean the turmoil over screen size.
A phone is supposed to be a device that fits in your pocket, not a device with ideal screen size.
Frankly, I want to see the day come that data streams over a network are all treated as the 1s and 0s that they are... a bit-stream.
Data is Data is Data. Phone calls are data. Texts are Data, internet protocols are data, all handled over a cellular network, or a WiFi network, that all end up in internet/telecom backbone infrastructure anyway.
a "phone" anymore should be an app, rather than a device, with prioritized QoS packets as VoIP, and "HD audio" quality that meters downward under bandwidth scarcity conditions.
A 4-5" device. A 7-8" device, and a 9-10" device, or a laptop or desktop computer. If they have a network connection, they should be able to communicate with other devices in pretty much any medium, text, audio, video, or appropriate A-to-B file transfer.
If it has WiFi only, then it is restricted to those types of networks, Ethernet likewise.
If it has cellular transponders, and a SIM card for that... then it opens up availability to a wider spread network.
Providers should charge for access, and maybe a surcharge for excessive bandwidth usage beyond the average.
Why have 2 different iPhones, and an iPod Touch, all with different hardware? Why not a 4.5-5" iPad nano (replace iPhone and iPod Touch). An "8" iPad Mini, and a ~10" iPad.
You choose with or without cellular access, and the associated cost for cell network service. But the apps would be the same. Even the phone app would be included on the non-cellular models... but require a VoIP carrier account, and only work on WiFi networks, like an audio-only version of FaceTime, which connects non-phone devices anyway.
They all should otherwise have the same nice cameras, RAM, your choice of flash memory capacity, lanyard post, bluetooth, and maybe have GPS on all models, not just the cellular models, if there is demand.
If there needs to be price stratification, maybe put less expensive camera elements, and less expensive plastic backing on the lower-memory models at lower price points.
Simplify and stratify.
Choose your size, nano, mini, or large
Choose your memory capacity.
Choose your network compatibility, WiFi or WiFi+Cell.
If cell, then select your cell-network ISP, with or separate from your VoIP provider that assigns your incoming phone number.
If WiFi only, then optionally select your VoIP provider for your incoming phone number when online on accessible WiFi networks.
Combine Visual Voicemail with eMail, and receive voicemail messages as transcriptions or audio files in your inbox.
cell carriers should focus on providing access to networks, and value added functions like bundled VoIP service with a phone number, an IMAP e-mail address, cloud data storage and backup, and multiple device-host plans.
Leave the hardware and interface design to the tech companies that design them.
If you want a bigger screen on your iPhone getting to the point where they barely fit in a pocket comfortably anyway... buy an iPad Mini+cell, which should have a phone app on it, just like the iPhone now does, and it should have the same chipset, the same high-grade camera, and all the features that the iPhone has... with a 7.8" screen... soon to likely be 'Retina-resolution.'
You can either have it in front of your face (like FaceTime), or with headphones+mic, or a bluetooth ear-piece, or the speakerphone built into your car's audio system.
Who puts their phone to their ear that much anymore anyway? it gets the screen messy with facial oils, and puts a radio transmitter right up to the side of your brain, and mandates that at least one of your hands isn't free...
It isn't as if an iPad mini or a full-size iPad, or even iPod touch now, doesn't have a speaker and a mic inside it also, they all do, and user-facing cameras, too.