I know it won't be noticeable, but still, I think people are hoping for a change in the other direction. I know that for the 7 many people are hoping that they will be able to cram a 5" display into the dimensions of the 6. If the 6s is going to be larger, even if only to a virtually undetectable degree, that means that trimming down the dimensions by next year may be outside the realm of possibility.
That assumes two things: (1) That Apple would do a full stack re-evaluation of all components to compensate the increase in screen assembly increase due to the integration of force-touch and the use of a different alloy, and (2) That smartphones have hit a wall in terms of size reduction in (a) thickness and (b) bezel thickness.
Apple is certainly not doing (1), the whole point of the 's' cycle is to minimise engineering, supply chain and production tooling resources and to allow for bigger difference in appearance between the major versions. The size reduction in terms of thinness is certainly slowing down in absolute terms and probably also in relative terms but there is no indication why it should have hit a wall at this moment. The size reduction expectations from the bezel size reductions were always overblown. The long edge bezel decreased in size from 6.1 mm (3G), to 4.4 mm (4 and 5), to 3.3 mm (6). Note that the shape of the case edge very likely influences this. The round edge of the 3G and 6 very likely adds a fraction of a millimetre to it. If we try to correct for this and reduce the bezel from the 6 by 0.2 mm and 0.4 mm for the 3G, we get a size reduction of 23% from the 3G to 4/5 and 30% (without this correction these numbers are 28 and 25%). Whichever way you look at it that is at most between 20 to 30% in two years and if you consider the constant bezel between the 4 and the 5, half of that in two years.
Now, taking the upper limit and assuming a bezel reduction of 30% for the 7, we get 1.8 mm of extra screen size for the same exterior dimensions. To get from 4.5 to 5", would mean an increase of 6.5 mm. So, at best this would mean an increase of width of 4.7 mm. To make this clear, making optimistic assumptions about bezel reductions, to get from a 4.5 to 5" screen, the phone would need to get 4.7 mm wider while you are worrying about a 0.2 mm additional increase from that baseline.
The only way to an increased screen size with only a minimal overall device size increase is by reducing the top and bottom bezels which requires a removal of the home button (or drastic size reduction, though for fingerprint reading it probably cannot get much smaller unless you want a fingerprint scanner where you have to slide over) or an asymmetric bezel (reducing only the top, though that wouldn't be nearly enough), ie, an integration of the fingerprint scanner (and/or home button) into the actual screen. A 0.2 mm case increase really won't make any meaningful change to those aspects.
Watch is to eliminate the need for side menus, as the display is too small for it. And since it doesn't have nearly as much useful content as on the iPhone, such as games and web, it will serve a much wider range of uses.
