I think the answer is really simple: it's the cameras, stupid.
I didn't buy an iPhone Mini because I wanted the best cameras. I waited for a 16 Pro. I think the market for the iPhone Mini would've been bigger if it had been a pro phone and had 3 cameras. I would've accepted a thicker phone, because what I liked about the mini was the size, not the weight.
The iPhone 17 is an amazing deal, and it still has great cameras. But only ONE camera for a MORE EXPENSIVE phone? No. Absolutely not.
The iPhone Air is a bad deal in every single way. Fewer cameras, less battery life, more expensive. Everyone is used to the weight of phones now and you'll want a case on your Air anyway, obviating any benefits of the slimmer form factor. Hopelessly bad idea.