The new screen size will be irrelevant. Apps will work just fine on the new iPhone if they aren't optimized for it. Same with the iPhone 4 and retina display, and same with the original iPad - all apps worked. And since pixels are only being added in one direction, rather than an entirely new resolution, development on some apps shouldn't take too long at all.
I think you are minimizing the impact more than necessary. Going to a new resolution that is taller is a much different thing then simply doubling the resolution.
And what about those apps that don't have updates? How will they run on a screen with more height?