Rumors of how the new iPhone 5 design will look like range from dramatically different to no change compared to the current iPhone 4 looks. I think the surprising answer is that both rumors are correct. The iPhone 4 design is iconic and sets itself apart from other smartphones. You can see from far if somebody is using an iPhone 4. Only real geeks can tell Android phones apart. I am pretty convinced that Apple does not want to change this design because of that. One of the early criticisms I heard though from friends owning the iPhone 3GS about the iPhone 4 was that the design is not organic and it does not feel as nice in your hand like the 3GS with its rounded back.
This is I think going to change in the iPhone 5. The overall look of the iPhone 5 will resemble that of the iPhone 4, but feature curved glass on top and bottom. Combine in your head the image of an iPhone 4 and a pillow and you get the iPhone 5. If you look at the iPhone 5 straight from top or back it will still look like an iPhone 5. Only when you look closer or from the side you will see the curved glass. Apple will either maintain or even lower the thickness in the iPhone 5, which would result an more narrow aluminum band that is wrapping around the iPhone.
The curved glass will bring back the haptic feel iPhone users know from the 3GS while the overall iconic look introduced with the iPhone 4 remains. The basis for even considering curved glass being a design element in the iPhone 5 is a rumor that appeared in May. According to that rumor stemming from Taiwan is that Apple has bought glass cutting machines for curved glass production. This rumor came out of the blue and is off track from the usual speculations about Apple related rumors. This makes it actually even more plausible. I do not think that someone fabricates such a story, so there should be some truth to it supporting my reasoning that the iPhone 5 will used curved glass.
Besides the pillow shape, I also believe the rumors about the edge-to-edge screen. As the leaked Sony Ericsson Xperia Duo shows, a edge-to-edge screen is very sexy and makes the bezel of the iPhone 4 look very uncool.