Companies do this sort of unexpected move type stuff when their product needs a boost. iPhone sales are stagnating and another tock device could further the decline, while a whole new tick could make people sit up a notice again.
Thing is they sold quite well. Enough to surprise Apple. What we haven't seen is Apple put all three on an equal footing with relatively similar stylings and features. I think there are more people interested in a smaller 4" sizing than people realize. Now that the smartphone market is well into maturity with little actual growth it's even more important to have some models out there that appeal to groups who won't buy the existing ones.
If the bezel is _completely_ removed and the home button with fingerprint reader integrated in the screen, you should fit 4.7" in the same size.
Probably because they've already broken away from their typical cycle by keeping the same design for 3 years. They typically do a redesign, then an S-model then a redesign. Also next year will be the 10th anniversary for the iPhone
I guess we all would prefer a 5.5" screen in the in 7 form factor over a 5" screen in the 7 form factor. I guess we'd also prefer a 5.8" screen in the 7 form factor. But putting a 68.6 mm wide display (5.5" & 16:9 = 68.6 x 140 mm) into a 67.1 mm wide chassis is a little bit difficult.
Other smartphones that went almost completely bezel-less 'solved' this by putting a small bezel on one of the four sides (the bottom) and put the front-facing camera there. Very thin bezel laptops have done the same. Of course the perspective a camera below the screen sees is less flattering.
