Bingo!
Take a moment to think through this.
-Apple sold 30 MILLION 4" phones last year. This is proof that people want this form factor.
-*most* smart phone users/buyers are not worried about the latest "gadgetry". They may want their phone "up to date" every few years so that it doesn't feel slow or to replace an aging device. Maybe even to gain some useful features like contactless payments. But otherwise they just want a decent phone, not to win the specs arms race for 3 mo at a time.
-Keeping a form factor that people have liked for 3 years is good for several reasons. One major reason is that there are thousands of quality accessories, cases, stands, docks, etc for this form factor.
This means that from day one there are countless options available for the phone. No waiting for 3mo-6mo or forever for the accessory you want to arrive. Some people may even keep a case they love from their 5s.
Companies that develop accessories are FAR more likely to develop for IPhones if they know they have a ~100million potential customers and that the product can be sold over several years for the same design. This means more quality accessories for the end user.
The consumer is also more likely to spend more money on those quality accessories if they know it will last them for many years and/or multiple phones.
This is an area where Android fails miserably. Few accessory manufacturers make high end model specific accessories for them. There are so many different shapes, sizes and changes so quickly that few companies want to make the capital investment for those devices. While android phones as a whole sell lots of units, each individual phone pales in comparison to the iPhone's numbers. So businesses tend to focus their resources on the iPhone first.
Apple was very smart in supporting its customers and the accessories manufacturers by keeping the 5s physical design.
