You're kidding right? Every iPhone upgrade is huge, and is
much better than the previous.
From your post, you think an iPhone that looks different externally will be a 'big update' only?
Hey guys, i just answered a similar question so i decided to paste the same thing here..
Short answer: Yes, wait.
Long answer: Those are just the given rumors, an 8MP Camera was leaked by Sony and a faster processor is the A5 Dual Core which the iPad 2 already as. I'm sure there are more than that to a 1year+ few months upgrade to the iPhone. Regardless, waiting is worth it.
Obviously you won't get back what your iPhone 4 is worth now, if you buy it. As soon as news breaks out of the iPhone 5, the iPhone 4 price will drop drastically. You'll probably be paying around $100 more for the iPhone 5 this way.
Look at it logically, why would you get locked up in a contract with a phone that's a year old when a new one will be out in 3 months? Also, you'll be stuck in a 2 year contract so you'll be waiting for the iPhone 7. Get your money's worth and wait.