Android fragmentation is real, but screen sizes are not part of the issue. The whole system is built around the idea of supporting different screen sizes, and provides you with the tools you need to handle them.
The real fragmentation is in hardware support (don't get me started on OpenGL-ES drivers) and manufacturers that modify the OS in crazy ways. It's quite frustrating to receive crash reports with stack traces showing a crash originating in some manufacturers custom code, with no way of knowing what went wrong.