One of the main comments is that Apple made a huge point of saying that the iPhone 5 was operable with one hand. In reality, they could put a phone feature in the iPad mini and it could be operated with one hand as they continue to improve Siri. You can already make calls with one hand without typing by simply telling Siri to call your contact. Texting can also be done with Siri. Calendar, reminders, alarms, checking sports scores, calculations, etc.. can all be done with one hand using Siri (assuming you can hold the device in one hand, there is no pressing need to be able to hit every button on the screen with one hand).
A better feature would be to have a larger screen for when you want to use it for Safari, navigation, or just about anything else that is visual. Most, if not all, apps have the ability to speak your demands rather than typing them. I have an iPhone 4S and mainly bought it for Siri and the better camera. Even when my contract is up, I don't see a pressing need to change to the iPhone 5 for the extra length. It just isn't enough of an update to make me change the way I use the iPhone.
A 5 inch phone, on the other hand, would definitely be worth an upgrade. While many are crediting Samsung with the invention of the larger screen phone, I believe it was around with HTC before Samsung got into that market. However, Samsung has captured the large phone market because Apple isn't even competing at this point. If you want a larger phone, and many people do, you have to go with another operating system. To me, it seems like Apple is leaving money on the table and pushing people that want a larger phone to Android. When my contract is up, I sure hope Apple has entered that market. Otherwise, I will wait until they no longer offer firmware updates on the 4s before changing my phone. At that point, I would definitely consider other vendors even if I prefer to stick with iOS because of the cross pollination of apps with my iPad and the ability to use iTunes Match, photo streaming, etc.
I have read posts that make the point that they already make the iPad and the iPad mini for those that want iOS with a larger screen. I happen to own an iPad 3 and I definitely prefer the screen to the iPhone 4S. However, I don't always have it with me. I usually just carry my keys, wallet, and iPhone. Why would I want to always lug around another device? I want something that can fit in my pocket and can be carried with me all the time. I am sure a 5 inch iPhone would fit that description.
I think having two iPhones that don't attract the market that wants the largest possible screen that can fit in a typical pocket is pushing customers away from Apple. I know people that have switched from iOS for this reason. Why not offer more choice? There isn't a downside to adding another size that will attract customers and possibly bring some of the customers that switched back to Apple. I am not saying they should stop making a smaller iPhone, I just think they should offer more choice.