Apple without Steve Jobs fell into this trap in the 90's. Apple needs to keep it simple as they have done in the 2000's. Apple are not even close to having money problems now, but the cracks in their armour are showing. And they can widen if nothing is done about it.
Apple in the 90's had an absolute mess of a catalog, comparable to Dell and HP now. You couldn't just go in and pick what you wanted without having to sift through spec sheets to figure out which minor variation of the dozens upon dozens of models of computer would best fit your needs. For someone who didn't know exactly what they were looking for, it'd be a pain.
Now, Apple has a very streamlined selection to choose from that very clearly states exactly what their intended purpose and target market is. You don't have to do an hours worth of research to figure out what you need. You go to the Apple website, look at their selection of two laptop categories, one All-In-One, one desktop workstation, one small form factor PC, a tablet, a smartphone, and two iPods. Everything's very clearly marked, and the only variation you get are a couple of sizes to choose from in each category.
That's a streamlined selection, and the addition of an extra size or two won't make their selection any more overwhelming or confusing than it is now. I'm not bothered by choices, so long as the choices are clearly defined, which they are here.
But if Tim Cook's Apple started releasing Mac Pro z8114, Mac Pro z9845, Mac Pro x5292, Mac Pro Lite 128, and 60 versions of iMacs, 10 versions of the iPhone, and continue selling old models 3 years back alongside the next without any clear indication of which is which...
...then I'd be worried.
I would consider a 5" phone a phablet even though some wouldn't.
Eh, when it comes to 5" phones, it's all about taste. I'd say it's still small enough to be easily pocketable, and isn't so large it requires two hands to use (though I usually use my iPhone two handed for everything except texting). For me, anything above 6" is phablet territory.