Yes. I agree Apple realizes they need to offer more options for users. Their iPad Mini is a perfect example. When the iPad was first launched they touted how it was the "perfect screen size", but now they have a smaller one. At this point in the industry users want options.
These rumors point to a larger screen as well. I think Apple is smart enough to realize many users will want a larger screen. What may end up happening is Apple will offer two iPhones at a time. A standard size and a larger one. I know many users, including myself, who would buy a larger size iPhone.
I completely agree with this. Apple has to move with the times.
They should have 3 iPhones:
1) The original size screen for budget/emerging markets
2) The iPhone 5 size
3) A "phablet" size iPhone (it's not a stupid phase, it's a great idea)
And the casing is now perfect for going multicolour. That's all - 3 sizes, a few different colour options.
The iPad Mini basically proved that a bit of diversification makes a whole lot of sense.