Good god, I really hope this isn't true. It would be a disaster, since the epectation would be that it works just like a regular iPhone, with all the apps working the same. And yet... there's no possible way it can if the screen size is reduced in any way.
As many have pointed out, the phone is really the perfect size now. It could maybe be a tad thinner (though not TOO thin), and lose a teensy bit off the top and bottom (though again, not TOO much) -- but it really can't afford to be any smaller in screen size, without serious issues to go along with it.
As many have pointed out, the phone is really the perfect size now. It could maybe be a tad thinner (though not TOO thin), and lose a teensy bit off the top and bottom (though again, not TOO much) -- but it really can't afford to be any smaller in screen size, without serious issues to go along with it.