The most convincing case for a larger iPhone screen I have seen has been made by modilwar. I do not remain convinced though because of two issues:
- If we assume that a larger screen will result in an extra home row of app icons, then this will result in us no longer being able to reach all of them one-handed with your thumb (go ahead, try it, the top row will align with the top of the speaker grill). And more importantly, it will also break one-handed reach for the navigation buttons typically found at the top.
- It doubles the number of iPhone UIs that have to be maintained. This might not be that big of an issue given the huge installed base, but it remains my conviction that Apple prefers one great program to two merely very good ones, and the two formats would be similar enough that one of the two would become a bit of an afterthought in the mind of developers.
On the other hand, it would make sense to extend the touch area beyond the screen to support extra gestures, as webOS has pioneered. This would be great mostly for games played in landscape orientation, as you would obscure less of your view with your fingers, and it would improve detection of system wide gestures, especially the show messages gesture.
Update: It seems that Apple considers a screen with 1136×640. This will mean that the new iPhone would have a bit more height so that you can still easily press the home button. To get an impression of the size, the larger screen would extend a bit farther than the current speaker grill on the 4S, with the base unchanged.
I am curious how you will be able to access the controls on that screen, it will be at the upper limit of what I can reach with one thumb, and even then only if I do not hold it very tightly. I have the impression that it will be too large for many women to use comfortably in one hand, so I wonder if some controls will get moved to make them more accessible.