The iPhone 5 is reportedly growing its display to 4 inches. According to the site and its component supplier sources:
The component suppliers noted that the production lines for Apple's next generation iPhone have begun testing, and Apple is interesting in expanding the screen size to 4-inches to support the tablet PC market as the vendor only has a 9.7-inch iPad in the market.
Of course, Apple is also reportedly planning a smaller (memory of physicality?) iPhone "Nano" for this year, as well.
That would give the company three players in a flash-mob type market segment. But, hey, it's Apple.