I am not sure Apple needs to be a follower in the market. Every phone out there tries to copy the iPhone, and they all fail at doing it. Its big enough right now. Geez why move away from success and copy the others...
The thing is that more and more people are shifting toward using the mobile phone as their primary computing device, to the loss of laptop and PC makers. This shift toward a slightly bigger, but pocket-friendly mobile computing device is merely accommodating this trend.
I think I could appreciate a move to 4” screen, but any larger - and an iPad would make more sense.