Dustin Curtis analyzing the design decisions behind changing the iPhone 5’s screen size:
>It’s easy to see Apple’s thinking here – the benefits of having half an inch more of display area far outweigh the downsides in reachability. Every area of the screen *is* reachable, after all (unlike many Android phones with 4-inch+ screens), it’s just slightly uncomfortable.

You really need to read this entire post, or at the very least the bulleted list of reasons why the iPhone 5’s other design elements makes the 4-inch screen more reachable than it otherwise would be. Things like a thinner phone allowing your hand to wrap around more easily is something obvious, but also something I hadn’t even realized was going on.

Personally I don’t like the extra difficulty at doing rare tasks, and I don’t like the extra height of the phone when in my pocket. However, I love all the extra screen real estate when viewing lists, reading things, and typing — which accounts for about 90% of what I do on the phone. So on the one hand it is a slight inconvenience, but on the other it improves the more routine things I do on the phone so much, that I find it hard to complain about the former.

Overall, the screen size increase is a huge win for users of any hand size.