Sources in Apple's production pipeline have indicated that the iPhone 5's screen will be less than four inches, according to DigiTimes.
That site says the 3.5- to 3.7-inch screen will allow for a thinner bezel, making the screen appear larger.
The back, which is reinforced glass in the iPhone 4, will go back to metal, more like the original iPhone, but not necessarily with that look-and-feel. The overall impact would be a thinner, slimmer profile, overall.
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Giving up screen size for a slimmer profile is definitely one way to go, but playing Angry Birds on Samsung's 4.3-inch screen is easier by half (an inch).