Resolution is actually the primary concern, not device footprint or even aspect ratio. Apple's approach to resolution is that it is a means to gain sharpness, not to cram more on the screen. For anyone reading who doesn't understand why, let me explain:
You could make a bigger screen in two ways - cram more pixels onto it, or make each pixel bigger.
All iPhones have the same screen size at 160 PPI (points per inch), which means that as a dev I can count on say that each 160 points of length in code will translate to exactly an inch on any iPhone, even a retina one. (The retina devices simply have more pixels per point). This also means that if I have an artwork that's 160 pixels wide, all I have to do to get it to render crisply on a retina device is to make it 320 pixels wide without any change in code. (Same goes for iPads and retina iPads)
As I see it, cramming more pixels onto it changes the apparent size of the screen (in points), which means if I coded a menu that's 320 points wide, it would now still be 2 inches wide, but there'd be be more than 2 inches of horizontal width on the screen. I'd have to change my app code, or at least the UI xib to make use of all those new pixels - many devs would be pretty upset if the OS stretched or resized their interfaces by default.
Making pixels bigger to fit a 4" screen would cause my 320 point wide object to be more than 2 inches wide now. Also, it'd mean backtracking on the ridiculously high retina display pixels per inch number that we all know and love. In that world, I could always resize my image to suit the new PPI, but again that would mean remastering all my assets twice - once for retina (pixel doubling) and once more for this strange arbitrary PPI
Regarding vector based artwork, iOS doesn't render vector data, only raster; and scaling down high resolution artwork without losing detail isn't just a simple affair of dropping pixels or taking averages - which is why Apple requires two versions of every asset, one for non retina and a -2x one for retina displays. The UI artist should have complete control over how the artwork is scaled, not the OS.
If Apple does do it, here's how I think they'll do it - the new device have more pixels than an iPhone 4S, with the same PPI. It would then render existing apps pixel perfect, at 3.5" size in the center of the screen with a black area of nothingness around it (it'd be exactly as it looks on current devices), and apps whose devs decide to put the time and effort into biggifying can say so in their app bundles and make use of the new screen size.
I suppose if they do go that path, it'd be pretty awesome for everyone. Existing apps would run without loss of crispness or unintended change in size, while movies and new apps get the new big display, and users get to keep their Retina resolution displays.
One thing's clear, however - the Android way of handling screen sizes (just stretch and let the devs worry about it later) compromises on crispness and fidelity, cornerstones of good UI design - the whole Retina display thing shows that Apple knows and believes in this.