I think the future of the phone is in the 5-inch size. Apple may be slow to go there, since they didn't invent it, and they can be a bit stubborn about such things. But I think it's like with desktop monitors, why does Apple no longer make a 15-inch or even a 17-inch iMac? Because everything else being equal, bigger is better. Once you could make screens cheap enough, they grew.
And I tell you, the usability difference between a 3.5-inch screen and a 5-inch screen with the same pixel density is very far from trivial. With web surfing, with reading, and with video, it's a big difference. I could never use an iPhone for web surfing, it feels like doing the tango in a phone booth. But with the Samsung Galaxy Note's 5.3-inch screen it's much more palatable. And the Note is thinner and barely weighs more than the iPhone.
So now the price difference is becoming trivial, the question is if anybody has too small pockets for a 5-inch phone? Maybe on some garments for children and women, I'm honestly not sure, but none of my clothes can't easily fit one.
To me, the Galaxy Note is the Kindle to the Nth degree. It's screen is barely smaller, but it's a ton smaller and lighter, the screen has twice the resolution and ten times the contrast (for a e-ink Kindle), it is way faster, it can handle whatever content you can throw at it, text or otherwise...
As a reader, it sucks me in. Even a full magazine format is quite easy to read on it, and for something formatted for smaller screens, I don't see how you can make a better device and keep it pocket-sized.
I'd prefer iOS (it would make video and vodcasts easier to get at with iTunes), but otherwise...
[Update] ...I realize that opinion is odd to some and unlikeable to others. But I throw it out in this brash fashion because 1) the e-ink Kindle hardly needs more promoters and 2) I think this idea is not one many have yet, but I think it's a very promising one. The Galaxy Note is not cheap, but if done purposefully, I don't see why something like it could not be done for a price similar to the Kindle Fire's price. And to me it's more useful than the Fire, which needs to shred 200 grams and half the thickness, and even then wouldn't be pocketable for most.