Just as with the pixel doubling, it's an easy way of updating the screen while still keeping legacy app support. Minimal size change also plays to the consumer who is comfortable with what they have now. Ditto for lack of major iOS modifications.
In other words, Apple is getting trapped with legacy tech and market issues just as others had been. Not having those problems was a major factor that allowed Apple to leap ahead in 2007. Now they seem headed down the same path that Windows Mobile, RIM OS and Symbian took. They're afraid of messing too much with a known success.
You claim the decision is about fear and legacy support. I would say it's about incentivizing developers to design to specific screen sizes to maximize usability, instead of aiming for the least common denominator.