At this point, the size of that screen is comical. I get the impression that people want the physical phone size, but the larger screen size. So, an iPhone SE of those dimensions, but with a full-face screen (pun intended) would be hard to keep on the shelves.
It truly depends on how you use your device. If you
live through it, want to keep it in your face 6-8 hours a day, can't keep it in your pocket for more than 10 minutes at a time -- then yeah, you will benefit from a larger screen. At that point, it's your lens to the world and you might as well make it a big, immersive (and addictive) one. I think you find it "comical" because phones that were recently considerd grotesquely large have become the norm (more addictive, more expensive, more easily dropped -- anybody surprised manufacturers have pushed it in this direction?)
If you take your phone out, use it for a specific function or two, and then put it away? The screen size of the SE is absolutely fine. Maps are legible, email is legible, the keyboard works. It enough space to scroll through however much text you want to read. And you're holding a device that
comfortably fits in the pocket and the hand, and never requires you to stretch to reach the topmost portions of the screen.
If you're looking for a clue that iPhones have gotten too big for one-handed operation, look no further than the "reachability" feature which had to be grafted on. There were human factors reasons the original iPhone was the size it was, and even the iPhone 5 was a departure from that.
As an aside, I wonder how much more Apple started to earn from dropped phones once they started getting to the size they are now...