I actually wouldn't mind that screen size for the iPhone. At first I thought it was the width that would bother if we got a bigger screen. But it might be the height. My fingers are long enough to grip and hold them one-handed. I've hard a pack of cigarettes that have been wider to grip than our phones.
Considering we have seen trends with thinness, cameras, real QWERTY, UI, and apps, it only makes sense the next battleground is the wow factor from the SCREEN. Displays are getting bigger and resolutions, contrast ratio, and ppi are getting higher. Battle of the HDTV screen displays for our pocket is the next round. No different than when people eventually went from SDTV to HDTV and DVD to Blu-ray. Quality of display is the one area we can still improve alot at with cell phones and tablets.