I figure fitting the aspect ratio is important so there's no cropping [of HD content], but is a tiny amount of scaling on a 4" display really going to make much difference?
I mean, Fox, ABC, ESPN all broadcast at 720P, and I doubt you'd seeing much picture degradation on a 1080P set (even though scaling is occurring and more noticeable on a 30-60+ inch TV).
This move is mostly about retaining the "magic" retina PPI while expanding the screen real estate to a logical A/R and minimizing the development headache.
I'm really looking forward to the new iPhone