Well, in my case I sat here, holding my ip4, added 1/2" on the diagonal and concluded that my thumb wouldn't reach across or that it would be an uncomfortable reach.
Is the screen small? heck ya, but i have used an iPad for over a year as my main browsing device - 1/2" isn't going to add much to an iPhone in my opinion.
I personally think that phones aren't an area where we need bigger devices. It's a PHONE, it needs to fit in a cup holder - and not a big gulp sized one. Smaller phone plus a tablet, or a add-on like the BB thing.
Or two devices, one normal sized, one huge for the rest of you.
You know, people used to make fun of the size of my palm treo..... Sure it's thicker than the ip4, but they are about the same width and and ip4 is taller. My old treo could be looking really really small soon!!