Makes sense especially with the recent news of lower profit margins.
I guess it's hard to lower the price on phones that are of equally premium materials today as when they were introduced (iPhone 4 and 4S). By the time the iPhone 5 would trickle down to where the iPhone 4 is today, it may end up with horrible profit margins.
I think this rumor holds water.
Well, even the original rumors (of 5s, 5, and plastic) suggested that basically Apple will keep older devices for one year only rather than two, so the 5 would never be where the 4 is right now, even in 2014. What this rumor is saying is that it won't even live beyond September.
But you raise a good point, maybe one of the drivers is margins; a device like 5 just won't cut it with $450 pricetag