The screen size of the iPhone 5 is seen to be bigger than the current iPhone screen. Here is an argument for a 4-inch screen with a new ratio.
One of the things likely to change in the new iPhone 5 expected in fall is a new screen size. Android phones have gone ahead with large screens as big as over 5 inches. Apple has stuck to the 3.5 inch size. The Verge makes an in-depth case for a 4-inch iPhone 5 with a changed aspect ratio.
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The assumption is that Apple keeps the width of the screen constant, but makes the iPhone 5 longer. The resulting screen would have an aspect ratio of 9:5 and a resolution of 1152 x 640px. Check out many screen renders that show the impact of such a screen on apps on The Verge. I totally like it, but a longer iPhone would stick out to much from my jeans back pocket. There is a reason why Apple kept the iPhone screen at 3.5 inches. A larger device is just not as portable.
I like a larger screen, but Apple would have to keep the iPhone size the same. Apple could get rid of the physical home button and magically move the speaker and camera to the fringes of the case to achieve that.
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