I would love to purchase a new iPhone (or Android) if they were to make a new device with a comparable form factor to the SE.I am in complete agreement with your attitude. However, it looks like the SE isn't coming back, and I wanted an Apple Watch anyway (after wearing smartwatches since the first Pebble...or SPOT if that counts). So I gave in, bought an iPhone XS and a watch. Previous smartwatch usage told me that the phone could probably remain safely in the bag most of the day. An Apple Watch makes it stay in that bag even more, I found out. If I'm out and about without the messenger bag/man purse, the cellular keeps me in contact. So for me, at least, carrying the monstrosity is reasonably solved.
Every use case is different, so this might not be a solution for everyone. And, yes, it is ridiculous that the solution is "go spend more money" because there isn't a reasonably-sized phone available. OTOH, most of my phone looking is "who's calling? What does the wife want on SMS? What's that reminder?" which is easily taken care of on the watch. When I do need a bigger screen, it's nice to have...well, a bigger bigger screen. :-)