Do we need a sticky about this or what? There are some pretty simple concepts that so many people just don't seem to understand.
The next iPhone
The next iPhone will mark the fifth generation of the iPhone. Whether it's called the "iPhone 5", the "iPhone 4S", the "iPhone 4GS" (I know, it's dumb), or just the "new iPhone", it will be the fifth generation iPhone. Therefore, until we know the official name, it is referred to as the iPhone 5 on the forums. There is no implication that using the term iPhone 5 means that the person believes it will have a new physical design.
The iPhone "tick-tock" design cycle
This refers to the apparent pattern that the iPhone is redesigned (tick) one year with the iPhone in the following year using the same (physical) design with new specs (tock) and it's false. Often times people associate this with a major-minor upgrade cycle. Here is the history of the iPhone's (physical) design:
2007: new design (tick)
2008: new design (tick)
2009: same design (tock)
2010: new design (tick)
As you can see, the history does not support a tick-tock-tick-tock pattern of design. There is not enough information to know if Apple has moved to particular pattern of design if you ignore the original iPhone (tick-tock-tick-__?__). Only until the iPhone 5 is announced can there be an argument for any type of pattern.
Major v. minor upgrades
The physical design (whether a new design or the same as a previous iPhone) does not indicate the magnitude of an upgrade. The distinguishing specifications of the iPhone can be divided into three categories: internals, peripherals, and design. The internals affect the performance of iOS and all its apps. The peripherals expand functionality and improve the experience of using iOS, but have a minimal impact on performance. Finally, the design affects aesthetic and practical appeal, but it has no effect on the use or performance iOS. In order of importance, these specs are:
Internals
CPU
GPU
RAM
Peripherals
Radios
Screen
Camera
Sensors
I/O
Storage
Design
Form factor
As you can see, the physical design contributes the least amount to the overall magnitude of an upgrade.
If one speaks of the upgrade to the iPhone 3G as "minor" it is in comparison to another upgrade, such as the upgrade to the iPhone 3GS. To illustrate, the iPhone 3G upgrades included: Radio (3G and GPS), I/O (louder speakers), and Form factor (rounded back, non-recessed headphone jack, metallic buttons). The iPhone 3GS upgrades included: CPU (cortex A-8 and increased clock speed), GPU (SGX535), RAM (doubled), Radios (doubled 3G bandwidth), Screen (oleophobic coating), Cameras (additional MP with video), Sensors (compass), and Storage (up to 32 MB).
As you can see, the upgrades from the 3G to 3GS were more numerous and of a higher importance to those upgrades from the original to the 3G. Therefore, the iPhone 3G was a minor upgrade and the 3GS was a major upgrade (always relative, of course).
Was the iPhone 4 a major upgrade from the 3GS? Well, here's the upgrades: CPU (clock speed), RAM (doubled), Radios (doubled 3G bandwidth, added 802.11 N wifi), Screen (increased resolution and lamination), Camera (2 additional MP, flash, front-facing camera), Sensors (gyroscope), I/O (additional mic for noice cancellation), Form-factor (thinner, glass back, steel frame).
There were far more upgrades from the 3GS to the 4 than the 3GS had from the 3G, but the 3GS had more significant upgrades in areas of higher importance (the internals). That makes them roughly equivalent so they were both major upgrades. With the A5 processor, the iPhone 5 is shaping up to also be a major upgrade.