If anything, It feels too narrow for my hands when using it as a phone, like how I feel when I use one of those tiny notebook mice.It's not just about tapping the screen, it's also the feel in your hand. The current iPhone width feels great when holding it to your ear, while some of the larger phones I've tried do not.
Like someone said, 4.5" 1280x720 would have the exact PPI, and all current apps could run on the 4 inch portion of the screen until they got updated. I really hope they go with this next time. After that I don't see any need or reason for an even bigger screen until we have foldable LCD screens so you can carry an ipad in your phone.