People can't honestly expect little improvement. Apple and it's iPhone are know for being innovative and (upon release) ahead of the curve. With new phones like the nexus prime Apple can't afford to place all its bets on the iPhone name. Consumers are gaining more knowledge and will not simply buy something because it has a nice apple logo. In order to compete in the market the iPhone 5 needs to step it up. It simply can't be outdated before it's even released.
I agree that Apple will make a great new device and all of the analysts will look ridiculous. Comparing it to the prime is silly. If Apple did nothing for 12 months, iPhone 4 sales would slow a bit, but still be several orders of magnitude higher then the prime.