I really think that from a business standpoint, the larger iPhone makes sense. It already has been established that there is a market for phones of that size (4.8+). There is no reason why Apple cannot
expand its current lineup to target it, unless they feel that the market is not significant enough to warrant the initial investment required. Would this larger iPhone cannibalize sales from its smaller siblings, or the iPad mini? Which one has a higher profit margin? Hmm.
Remember, iDevices are Apple's cash cows. Period. This is not the same as the netbook issue: a lower quality device made to fit a particular price point. Apple can deliver a larger,
high-quality device to fit a different customer base than the one that purchases their existing iPhone line. And it would not need dramatically different components to achieve this. But the above considerations have to be reconciled. The devices' purpose have to be clear. I theorize that their main reasoning for the iPad mini's differentiation from the iPad is the "one-hand" use thing. They can and did sell that. This would be harder to do on an iPhone "maxi". What would be the reason for it to exist? What problem would it solve? What could you do with it that you cannot do with the 5? I believe that Apple is asking (and hopefully, answering) these questions (or they already did).
In any case, by Apple having 3 iPhone sizes they would be able to somewhat hedge that bet, and see which product is the most popular. Much like they did with the MBP line, they might be able to eliminate one in the future to promote simplicity, cost-cutting, and mitigate any (possible/existing) fragmentation (much to my chagrin-the MBP17" was the single best computer I've ever had/want). This would give Apple flexibility, without having to stray too far from their product line philosophy. They don't need to do every size imaginable, but they could "keep it simple" with three (well, 6 if you count white and black) models still.
I think this would (mainly) create two tiers of customer preferences (portable devices): large and small. For example:
small: iPhone 4s/5 - iPad mini - 13"MB (Air-Pro)
large: iPhone 4.8+ - iPad - 15 (17"

) MB
I think that, for a type of customer, a larger iPhone would obviate the iPad mini, but not the iPad (or an iPad maxi (13")

) This type of customer values screen size over (relative) portability.
Those who value overall size and portability over screen size, could still get the original/5 iPhone and iPad mini.
In any case, I would love to see the three-tier category approach return to Apple, like they used to have for so many years:
iPhone mini, iPhone, iPhone+
iPad mini, iPad, iPad+ (13?)
MBA 11", 13", (15"?)
MBP 13", 15", 17"
Desktops-"good, better, best"
However, Apple has been moving towards a Sith-like rule of 2 for a while:
iPhone4/4s, iPhone5
iPad mini, iPad
MBA 11", 13"
MBP 13", 15" (killed the 17"

)
iMac 21", 27"
mac mini, mac mini server
Given that, for them to have a bigger phone means killing the 4s or the 5 (which I find unlikely). So, we're back to where we started. Will they break tradition and add a size for their cash cows? Hmmm.