Coming from a person that has owned a Galaxy Note 1, 2 Galaxy Note 2's, HTC One MAX and every other flagship Android phone. I would say 4.7" would be sweet for the next iPhone, but I say that with a qualifier. If they can get it like the Moto X, as others have said, it will be great. I absolutely love the Note 2, but eventually you get tired of lugging something of that size around. And one handed use is something that is important to me. I can force myself to get by without using one hand, but honestly it is so much more convenient. Also, while you're out and about, it's a lot easier to shove the moto x size phone + case in your pocket than a Note 2 + case, or in my situation I had an Anker 6200 mah batter, modded Otterbox Defender, and Note 2.....
Seriously though, I would actually buy full price off contract (Verizon Unlimited user) for a 4.7" iPhone in Moto X sizing. They can keep their phablet. I think I got the extremely large sized phones out of my system finally.
ETA: One thing, and this just may be me, but if Apple releases a phablet sized phone, it will cut into their iPad sales. When you have a phone like a Note or similar, you find it really negates the need for a tablet and a phone. It's that happy medium between the two, which IS convenient.