The iPhone 5 compromises to make the screen bigger, but only by a little.
I don't think I could use a 4" device like a Nexus 4 (I have a Nexus S which was a good size), on my commute where I need to hold onto a handle of the train, underground with one hand, smartphone in other.
I have big hands. I loved the original Xbox controller before they shrank it. I love bigger phones. I find the iPhone 4 and earlier too damn small for me.
The Apple commercials with someone hand showing that it is "perfect size" are simply laughable. Lets have someone with small, medium, and large hands film that commercial and you will see how ridiculous the concept of "perfect size" is.
Perhaps you have large hands, and loved the original XBox controller, but you would be in a minority.
There are actual limits to width that have to be take into consideration. Just because you might have a hand large enough for a nexus, does not mean every human, or even adult male for that matter shares that trait. And you're guaranteed less women share that trait.
Yes, I can. It's complete bullshit. All the arguments for why the iPhone 4 form factor was the best are now being used to claim that the iPhone 5 is the best by a lot of the same people. That just goes to show that you can manipulate that argument to work with whatever screen size you want.
The argument that a smaller screen, allows for a smaller surface area, that is easier to navigate is obvious.
3.5 is easier to use than 4 which is easier than 5.
People may say a 4 inch screen is better in general (because the forgive ergonomics for real estate), but not in ergonomics alone.
That's not obvious at all. Larger screens can allow for larger touch targets, and by showing more content they can reduce the need for "navigation" in the first place.
Citation needed.
The danger is that changes to screen size aren't always reflected by the software, so you may have a small screen that scales down, or a large screen with wasted real estate. See the host of apps that haven't update for the iPhone 5 screen yet!!!
I'll acknowledge that many times you have to fiddle a bit to make sure that your Android view works well on a variety of screens, but usually you can target between 3 and 4 layouts and have a usable UI for all devices from 10" tablets all the way down to small feature phones.