The more you look at this photo the more you can see it's a total FAIL at a fake mock up. Mac Rumour editors you need to put your glasses on!!
Apple will either keep the current screen or increase to 3.7 or 3.8.
VERY good read on why we won't see a 4" here:
http://www.tuaw.com/2011/02/16/the-four-inch-iphone-display-doing-the-math/
Tat may have been posted before. Anyway the only way we will see a bigger screen is with a bigger phone. And many people including me don't want that.
"Retina display" is a marketing term. Apple can use it however they want to.