iPhone 5 used is worth about $500 right now. He should give you an additional $100-150 cash because the S3 is only worth around $300-350 right now.
Also the value of the S3 is about to drop tremendously over the next few weeks so if you wait it will only be worth $200-250 by the end of April and you could get more cash out of the trade.
Every post except this one is ignorant of the difference between phone value and phone features. It doesn't matter what it does, what matters is the iPhone 5 is more valueable (they are selling for more $$$). You can list 1000 things the SIII does that the iPhone 5 can't, but it still doesn't matter. In order to get a fair trade, OP needs to add cash considerations to his exchange.
In short, when it comes to value, features have little weight, monetary value is everything.