I wouldn't say that the smartphone industry is converging on some single ideal form factor or feature set. I think everything is just changing because people want things that are new and different. For the last 2 years, phone screens have obviously been getting larger, and it looks like even Apple is caving in on that. But I wouldn't be surprised if, in the next two years, there's a new trend of making phones amazingly small again. First it's "look how much bigger our screens are than last year's phones!" and then it's "look how much more compact our phones are than last year's phones!"
Thus I think a slightly larger iPhone screen(given their higher resolutions compared to competitors) will be the sweet spot. It'll likely dominate older iPhone models pretty quickly and cannibalize iPad sales.
It will likely be cheaper but still retain it's appeal to the upper class as a status symbol(people can trot around with their new larger iPhone).