I've had 2 Macbook Air's and have passed them down to my kids, so to say I'm not in the market...? I'm not talking about increasing the screen size to 16". From a marketing standpoint (and Apple is all about marketing), the number 14 would attract a lot more buyers than 13.3. If it's thinner, it doesn't even have to be any heavier.
It depends on why you passed them down..

And why would 14" attract more buyers than 13,3"? Because 14 > 13,3? If people are looking for laptops with "big" screens, why would they even consider a 13"?
As far as "if you need more ports, you're not in the market for an Air", yet one of the biggest complaint about the Air is the lack of...
You know what you buy (in the best case) before you do so. Sure, you can complain that it only has 1 USB port, but if you pass down you MBA because (for example) you realize that 1 USB port isn't enough, or that the 2GB RAM are not sufficient, then you bought the wrong product in the first place... If you want a "good" light laptop "you are in the market for an Air".. but being light is not everything which defines that "good" and light laptop is.... If you want a lightweight yet powerful laptop, you may be better off with a Sony VAIO Z... Being "in the market for something" does not only mean to want a product or a certain aspect of it, but using/enjoying it no matter the problems you have.. which you
obviously did not...
Again... not sure on the logic to "smaller makes sense", but I've seen a lot of Air's in boardrooms. It'll be painful to watch them pressing their nose against the screen reading there spreadsheets etc. The Air was once marketed as the "executives laptop".
That depends on the question whether this "new" MBA WANTS to be what the 13"AIR is/was, or whether it "becomes" something different... the current AIR does not have to be EOL'ed.. they could co-exist and the 13" can be updated later..
But where has apple ever actively marketed the Air as an executive's laptop? At least at apple.com I cannot find any reference to this.
Maybe elaborate on why 11.6 makes sense...please.
It's thinner and lighter. The "executive laptop" (as you call it) does not have to be 13"... many of my friends at university have eeePCs. Those that are 11,6" are big enough to read pdf or spreadsheets comfortably.. and if it has a better battery life, you will never have to carry the charger with you.. even better for the executives
Apple isn't just about making things smaller and lighter. They're about selling numbers and making money. Make no mistake!
While this is true, the form of apple products is one big selling point. Lighter and thinner means, in 90% of cases, that the products "looks" better.. see the new iPhone, MacMini and MBA for example.. I think everyone agrees that the MBA is one of the best looking laptops out there.. And in which aspect does it look different than an MBP? It is thinner (form factor)... okay and it does not have the black bezel...
Many people proclaim that the slogan "form over function" is apple's philosophy.. I would rather say it's "form improves/gives function", without being in the mood to elaborate it right now

(gotta' study

)