Width issues can be mitigated by edge design. I tried the HTC Titan and that's a 4.7 inch phone but I had no problem using it due to how well it tapers.The only newer phones that can fit my width limit and I have an interest in is the Nokia N9/Lumia 800 which have a 3.9/3.7 inch screen, respectively. So the absolute perfect size isn't about screen. It is about the overall width of the phone. Ideal width should be nomore than 62mm for me.
I think most people think the iPhone would remain a boxy shape that would be tough to hold but I think a bigger screen would mean a design that would be more streamlined.