I disagree. Increased screen size as a result of removing physical buttons makes up for the loss of physical buttons in my view.

You can now watch a movie, play a game, even browser a crappy website with desktop-only layout on an iPhone Mini. Try to do this if half the screen estate is replaced with physical button.

I am a big fan of physical buttons though, I which apple would add more of them on the sides, with some programmables, that would be awesome. Some Android devices have this for example.