Agreed (I believe you meant 960x640 though).what's the point of 960x480 on a puny iPhone screen? I can easily see this hampering graphics performance, to the point where it will be as slow as the original iPhone 3G compared to a 3GS. It's a 300% increase in number of pixels to juggle.
An increase of about 100% would be much more believable / achievable.
I think it more likely to be 720x480 (125% increase in pixels).