?.. but I think that reading novels is best left to tablets at the very least.
Everything is best done on tablets, not just eBook. But tablet is not portable. The thing is both has a role. When out and about, smartphone should be able to take over the role, be it web surfing, eBook, viewing spreadsheet, or whatever, and still reasonablely enjoyable user experience. The current 3.5 inch screen makes it less tha ideal for such role to be fulfilled. not everyone uses it only as a phone, radio, and MP3 player, which would not require larger screen.
As long as it remain highly pocketable, I'll always go for bigger screen. No doubt about that. Honest, even if that requires two handed use (although I'm sure it would not require such), I'll still prefer it over a tiny 3.5 inch screen. What we need is two models, to cater to more diverse user requirements, instead of forcing the majority (if is poll is any indication of the real world preference) to accept the preference of the minority.
Not having a four inch screen is the main reason I'm not buying 4S. I love iOS to dealth, but this year, I'm likely to buy a Samsung Galaxy Nexus. Say whatever you like, I much prefer its screen size. Of course another reason I'm going for it is to educate myself on what Android 4.0, a vastly improved OS, has to offer. If I see a 4 inch screen iPhone 5 next year, I'll definitely come back. If not, I hope Android 4 can be good enough for me.