I think this is a reasonable thing for them to do. Get rid of the 5, 5C, 5S altogether and make a 6C, 6Mini, 6- whatever they want to call it that could replace the 5S and be the free phone on contract. Keep the 4" screen from the 5S, and upgrade the internals to be equivalent to the 6, including TouchID and ApplePay functionality. That way everyone buying a new iPhone this fall will be set up to use ApplePay, without needing the watch.