Calm down, so far this is just a totally unsubstantiated rumour. Having a 4.7", 5.0" and 5.5" phone seems unlikely. On the other hand, you call it fragmentation, but is it? If Apple sold iPhones from 4.0" to 6.5" in 0.1" steps, what problems would that cause? As a software developer, I can tell you "none whatsoever".
If Apple were to keep all models reasonably abreast with each other, then there is no problem. However, if fragmentation happens, I fear marketing teams will be enticed with trying to create market "differentiation" and "bundling" like the crazy cable TV guys. I certainly am not looking towards a day where Apple will force users through a bazillion options:
If you want a decent camera, choose the 7.4" model
If you want a decent screen, choose the 7.3" model
If you want a good battery, choose the 8" model
If you want 512GB, choose the 7.9" model
If you want a SIM door, choose the 6.9" model... and so on.