I don't think people have a gripe with larger screens, really. As you said, if they could go to work on the bezels (the way they seem to be able to do on various iOS devices), a 23" display should fit in the current footprint of the 21.5" chassis.
I don't think Apple is ever going to make a smaller (17-19" iMac, although part of me would kinda dig that...I like that 17" size, having experience on that in both iMac and PowerBook G4 form, years ago). But if they've got some new design up their sleeve where a 23" iMac is in the rough space of a current 21.5", and for the same, or even a bit less, money, they know there will only be a sliver of the population who'd squawk about that. And they've proven plenty of times over the years that they don't seem interested in catering to/pleasing the "sliver" demographic.
The 21.5" might stick around, crippled/underspec'd, and sold for as cheap as possible. But the two larger models would be the new mainstream/flagship iMacs, I'm guessing.
Apple isn't going to make a design/manufacturing design based on what a handful of outliers want. They've told all us who like a 4"/one-hand-friendly iPhone to get bent.
Also, Apple is all about creating multiple, confusing and overlapping spaces. That'll be nothing new.
But seriously, I'd like to see them not do the iMac what they did the 12" MacBook/13" Air/Pro space in recent years...because, yes, that was a mess-and-a-half. No mortal could figure out the way and what of any of that nonsense. Thankfully, as of now, the "smaller notebook" field is fairly easy to navigate.
The iMac line already has an ugly-stepchild variant (non-Retina, low-speed, etc.). Up for debate if that needs to stick around or not.
It just seems like they could create a universal, smallish (23" if that's the reliable rumor) chassis and then populate it with whatever components they wanted to span a nice, something-for-everyone $999-1,799ish range...if someone wants a non-retina, spinning hard drive, 8GB RAM, etc. desktop AIO, they can get one for under $1,000. And then the rest would have Retina, SSD, some options on the graphics, etc.). I can "lottery spec" a currently 21.5" model for well over $2,500 if I wanted (max everything out). But I think most folks are served well in that $1,199-1,499 space...Retina displays and SSDs are "normal" now, and no sense making those some sort of "premium" BTO step up on this next go-around.
I'm hoping the recent Air and SE releases provide a clue as to the sort of approach they've got in store for the iMac.