It sounds like you're treating the introduction of new phone models as an exogenous event, but that's crazy. That's like saying "Of course people don't ride horse-and-buggies any more; hardly anybody make them! That doesn't mean cars are the future."
If manufacturers are introducing fewer models, it's because there is reduced demand for them.
Thank you for introducing me to the word "exogenous"
Often I don't want to have a huge phone with me at all, but then I don't have a choice. The long term may be some sort of personal communicator (watch or otherwise.) Small screen, advanced input when necessary by voice. When people want to read things, write messages, watch video, play games, etc, then they can pick up their phablet -- which is effectively a phone sized tablet that fits in your pocket.
The Apple Watch probably is the step towards this direction. However, because it needs the iPhone it misses the full use case, for the moment.
Back when cars were supplanting the horse-drawn carriage, people had choice for years. Even today, if you prefer, you can get a horse and the carriage to drive around in. But you can't find specialty shops building that small phone you want.
It's hard to keep a smartphone for more than a couple of years because the industry moves on and drops you like a hot potato.
That assumes manufacturers solely pay attention to demand before making and selling a device. Which is wrong. They pay attention to what carriers want. Which is usually what will help them sell expensive data plans. Also, companies care about what Samsung is selling. In Samsung's case they care about what components they themselves supply to other companies (SoC's, OLED's etc.). So it's in their best interest to keep them in demand.
http://www.heise.de/preisvergleich/?cat=umtsover&asd=on&asuc... says that right now, android phones up to 55m width have at most 512MB RAM, so they'll be sluggish or worse.