I'm getting older and find I often need to take off my glasses (I'm short-sighted) to read my iPhone 5's screen. I would cheerfully pay $100 extra for an iPhone with a bigger screen.

My guess is Apple plans to deliver larger-screened iPhones, but they want to do it the right way, i.e. without causing fragmentation. My guess is simply scaling up the UI display without increasing resolution violates their sensibilities (not "retina" any more) so it's a question of getting ducks in a row (true scalable UI elements). Note that the iOS7 switch away from skeumorphism and bitmapped UI components does a lot to pave the path.

The idea that a small phone is just better for everyone is -- I think -- silly. Apple just won't release a half-assed product.