The only way to increase the screen size is to lengthen the screen in my eyes. Make it 16:10 instead of 4:3. Apps wont be affected because you just will have black bars on top and bottom of the screen. But this is only possible if the iPad goes the same route. Maybe we will see it sometime in the future but surly not in the next iPhone.
I've thought about this and don't think it's a viable option because the problem with the small 3.5" isn't the height, it's the
width. If they can't also widen the screen out, they might as well not even bother. Movies would be better, but everything else would still be cramped as hell.
How much sense would it make to have a lower resolution than the iPhone 4?
exactly my thoughts. they just announced this "retina display" this generation. Why dump it for the iPhone 5 so quickly? the thing is beautiful.
300dpi is still considered "retina". Apple could go 3.8", still call it retina and you could never tell the difference in clarity.
Which is why there is no 4 inch screen update coming along. Why would Apple loose the same iconic design of the iPhone. Sure there have been external changes, but the screen has remained the same.
You don't need a larger screen, you want one just because other smart phones have one. But this is Apple, they don't follow, they lead. By the looks of it, using 3.5 in screen has put them well ahead in the game.
Apple is not the leader
because of it's 3.5" screen, but
despite of it.
If they would have put a 4" screen in the iPhone 4
while they were redesigning the whole damn thing, they would have been kings of the universe.
Re: OP: There's not enough detail in any of your options to make a choice either way. I say go 4". 288ppi would hardly be discernible from 300 unless you had Superman's eyes. Widen the iPhone back out to the 3GS dimensions and get on with it.