It looks like they have already gotten into the "stupid megabits war" The average consumer to totally ignorant on this issue and still equates the number of pixels with image quality. Apple is happy to play along as the misconception sells cameras.
But there is good news too. Look at the focal length and f-number on the lens. In is incrementally improved over the iPhone4.
Everyone who knows how cameras work knows that cell phone images are diffraction limited, not resolution limited and the only way to change that is with a physically larger lens. But such a lens will not fit in a phone.
Rumors aside, I am not sure I agree with this. When the iphone 4 was introduced, Steve specifically spoke to your point about more megapixels not ness equating to better pics. Not only that, but the entire ecosystem of iOS devices has really stayed away from getting into specs, but rather aiming to show usability and performance.
Remember this is just a rumor, but if they do find a way to make the iphone snap better pics while at the same time increasing the megapixels, great. I'm guessing the quality will only go up though, regardless of megapixels. Now if they could apply these alleged new lenses and new tech to the existing 5mp speck, could they get even better performance? That is a more interesting proposition. I often wonder how my 5D would handle noise if it did "just" 12mp vs the 21 with the same sensor tech. But I do crop a lot (esp using prime lenses, which is what the iphone lens is) and more megepixels can com in handy too. Its a balance.