They released the iPhone 5C and sales for iPhone 5S took them by surprise. They upped the price of the iPhone when they released the 6 and 6 Plus and it outsold any iPhone release previously. They released a solid gold smartwatch and it sold, well, better than the "No one's going to buy
that!" predicted by analysts, haters, and us lot.
I guess Apple really doesn't need a "cheap" option, anymore than it already offers.
Also, this doesn't have to stop them releasing a 4" phone again. Didn't lots of people say "I don't want a cheap phone - I want the latest internals, just a 4" screen."