Apple don't want to be selling the 4s and 5 when the 5s come out. The 4s and 5 eat into there profits.
Missing feature will be retina display
This is very true at least according to analyst.
However the problem is average people are going and picking up a 4 or 4S because its cheaper compared to the 5. And that nibbles away at overall profit.
Since profit is a % you have to maintain high revenue to maintain high profit. Selling a cheaper device puts you back in the same place.
Only way around it is to sell a REALLY cheap device with VERY high profit %. As a salesman we call this "ripping people off", basically paying more for less. Apple already had an insanely high profit margin, this is no secret. They'd have to bump profit to 70%+ to make a cheaper device as profitable as current flagship (more or less depending on final price).
Then we have the benefits of older models already being in production. The most expensive part about having a product built is start up cost. Facilities (rented, leased, bought), worker training, machinery, new materials, etc etc.
The more I want Apple to change the less I want them too.
A lot of Apples "cheap" products were once high end THEN upgraded to something even better. Ex iPad 2 then iPad with Retina. The iPad 2 is less expensive but it wasn't designed to make a cheap version of the iPad with Retina it just came out first.