Steve's reasons for insisting that the 3.5" was the perfect size had nothing to do at all with technology.
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They didn't think it was worth updating the iPhone 6 with the traditional screen size. It's pretty clear that they don't intend to continue with the size.
Your evidence for this comes from...? Gut? Talking to Steve's ghost? Other-world experiences? It had everything to do with technology (both hardware and software). It was also why the iPhone was released before the iPad. Something Steve talked about himself.