We live in a tech-society with an extremely short attention span. Change for the sake of change--but only if its good change, please! A "smartphone" has been defined, its capability set and limitations have also been defined. With all this, I ask:
What are you expecting?
It's either change for the sake of change of change for the good (or bad if your idea is faulty or has bad implementation). 4,7 and 5,7" screens aren't changes for the good. It's change for the sake of change. Just because everyone else do it too. And it was never a path of Apple. Apple was always a fighter for the innovation.
What am I expecting? Do what you can do the best. Release the innovative products. Focus on iWatch. It sounds like a great idea. If you can't bring new innovative features to the product on a yearly basis, then do it more rarely. No one forces you to release a buggy OS and release another one year later when you didn't yet finish to patch bugs of the previous release. You shouldn't call it "innovative" just because number changes from 7 to 8. People know when they're being fooled. Fix the problems you already have. Entice users to upgrade to Mavericks. 36% of them still sitting on OS X 10.7 and 10.8. And 10.9 is free. You can't? Why? Maybe because the OS is not so good or innovative? Maybe you should release updates every 1.5-2 years just like you did some years ago, releasing it when you are really ready to release something new and inspiring? Or maybe you just don't try hard enough to entice them.
Learn the lessons of iPhone 5c. Don't rush to update iPhone when you didn't yet analyze all your issues. And what, smartphone "has been defined"? In 2006 everyone thought "smartphone has been defined". Stylus, tiny icons, hardware keyboard, etc. And the next year Apple shows the iPhone. In 1983 everyone thought "PC has been defined". And then Apple releases the first Mac. And see how it evolved over years. No one at Apple said in 1991 "oh, now the Mac is defined, let's just upgrade processor and RAM".
iMac in various forms, and each one was a genius one on itself, Cube G4, Power Mac, new Power Mac 2013, iBooks, aluminum MacBooks, MacBook Air... First mass-market computers with optical drives, USB, FireWire, Thunderbolt... It was the evolution of great ideas, not the yearly 'evolution' of bigger screens and processors dubbed with the words "oh, it's magical".
I think Apple should take a pause and refresh its mind. There were too many doubtful decisions recently. Clearly, 5.5" screen is not the great idea. And it seems it exists only because there're no other ideas at Apple on how to improve the iPhone.
Pairing with iWatch would be great. But this year iWatch is not ready for release yet. It needs new original fresh design, not the one that's shown on these pictures above. New features, I don't know out of my head which exactly, if I was paid for it, I'd really sit and think on how it can be really improved. If there're no ideas right now, I'd just refresh the existing model with few spec bumps and a new color and improve the existing features. Touch ID has a great potential that needs exploring. As well as iBeacons, offline Siri, some kind of offline Maps, some tricks with Touch ID, improved iCloud support, maybe a couple of new apps as it was rumored, better camera. It'd be mostly software updates but it can be tied to current and improved 5S to boost and keep sales. And then you'll have another year to come up with something really improved and fresh, not just a bigger screen. And when you got some really nice ideas for the next iPhone I think you'll be giggling that once upon a time you had plans to make it 5,5" large. Also there must be differentiation of some kind. Samsung has 7" phones - great! Let them do it and keep Apple releasing current 4" models. If Jeep makes off-road vehicles it doesn't mean Porsche should start making it also.
It's like asking "oh, Android and Samsung has this and that... If you add these things, I'll switch to iPhone". Why? Keep using Android. iPhone/iOS and Android/Samsung are different things and iPhone/iOS has its own great features and a different set of advantages over Android. No need to make iPhone/iOS a clone of other products. Especially considering other products are already cloning you. That means, up to this point you did everything right.