The SE was introduced because a core demographic still appreciates a smaller display.
And I disagree, A new iPhone SE would not have launched by now. This is not likely an update that's going to see an annual refresh similar to the iPhone 7/7+. The iPhone SE is a budget phone and does not incorporate some of the latest hardware. I do believe iPhone SE will see a refresh, but not likely until 2018.
The SE sits in between the 6S & 7 if you go off performance so it still a very powerful little phone & has plenty life left init yet.
Once the SE has run it course that will be it, there won't be a SE2 it be a new budget iPhone based on the 6 or 7 design with a 4.7" screen as Apple will have moved onto a new design for the 8 or 9.