Here's a little walkthrough of my thought process:
First I saw the video of iOS 4.3 with the multitouch-controlled multitasking and saw how simple and intuitive it looked. Also, there are rumors that the next version of iOS devices would lose their home buttons. I then made a version of the iphone 4 without the home button, and it becomes pretty obvious how much space is being wasted on either end, especially with recent smartphones trending toward larger sizes.
By cutting the space on either end, this allows the screen to be expanded to 4" (aspect ratio preserved), while the size of the device shrinks (width becomes a tiny bit larger). Then I just made it a bit thinner.
For those concerned with one-handed home-buttoning, I'm sure there are other options. What about a three button setup along the top left edge: home, volume up and volume down. These can then become camera controls (shoot/zoom) when necessary.
Anyway, taking the button off the front was the only real 'choice' - the rest follows.