Good iPhone apps already have vertical flexibility due to the double-tall status bar that appears when you're on a call, recording, or tethering. A taller iPhone is a piece of cake for devs. It'll be a lot easier for devs than the retina switch was, that's for sure.
Apple seems to have decided that ~2.3" is the maximum width for a device designed for the human hand. I have an original iPod kicking around and it's amazing how similar it feels in the hand to an iPhone 4S. It's basically the same form factor, just 1/3 the thickness.
Logic, logic, logic. Logic is the beginning of wisdom, Valeris, not the end.
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