Where a 4 inch iPhone fits.... If the price is sufficiently lower, for the lower hardware specs, it replaces the iPod Touch. If the price (off contract) comes close to the pricing line of the iPod Touch. After all, the iPod Touch was kinda goofy tech wise since it was oftenly only really missing the cellular chip (GPS included) and antenna, very little else.
iPhone 5se and its future cousins will be the replacement line for the whole of the iPod Touch line. The "phone" you get your kids, or the phone you get if you're getting a "cheap" Apple phone. This way Apple streamlines their hardware lines by not having to build separate boards without the cellular components.
I don't see why they won't have space for things like 3D touch. If they stick with the thicker body frame of the iPhone 5s, thats plenty of extra depth. The reason why they wouldn't have 3D touch would be because they are using older boards that don't include the 3D touch processor. Not unlike how the iPod Touch uses "older" boards sans the cellular chips. For this phone it will specifically based on the iPhone 6 boards. The following iterations will likely be sourcing their boards from iPhones that have that processor. Not including 3D touch at that point will be a choice by Apple to not include the sensors to match the processor, possibly to bolster the profit margin. However it won't be due to lack of space or inability of the underlying hardware.
iPhone 5se and its future cousins will be the replacement line for the whole of the iPod Touch line. The "phone" you get your kids, or the phone you get if you're getting a "cheap" Apple phone. This way Apple streamlines their hardware lines by not having to build separate boards without the cellular components.
I don't see why they won't have space for things like 3D touch. If they stick with the thicker body frame of the iPhone 5s, thats plenty of extra depth. The reason why they wouldn't have 3D touch would be because they are using older boards that don't include the 3D touch processor. Not unlike how the iPod Touch uses "older" boards sans the cellular chips. For this phone it will specifically based on the iPhone 6 boards. The following iterations will likely be sourcing their boards from iPhones that have that processor. Not including 3D touch at that point will be a choice by Apple to not include the sensors to match the processor, possibly to bolster the profit margin. However it won't be due to lack of space or inability of the underlying hardware.