[Eugene]

Scenario (A) is not going to happen. No need to scare yourself into a Chicken Little panic. Just like flip phones and dumb phones before them, 4" phones are staying around forever. There's a vast market for them outside of chucker and your sister. All those burgeoning middle-class Brazilians, Indonesians, Indians, Chinese, etc. people have to start somewhere. Manufacturing is also to the point where profit margins on volume phones might see an uptick again.

As for developing apps in relation to screen dimensions. There's only four flexible display modes defined by your device and its orientation. There's landscape-normal, landscape-constrained, portrait-normal and portrait-constrained. Right now the iPhone 6 and below are constrained in both orientations, whereas the 6 Plus is portrait-constrained. Developing universal iDevice apps is easier than ever since they finally got around to defining rules for variable displays.

To reiterate, the iPhone 4" will continue to be developed in the forseeable future...probably far into the next big paradigm shift, but it will be one upgrade cycle behind for the purposes of upselling the bigger phones. That's not as bad as you think. The A8 in the iPhone 6 is not appreciably faster than the A7 in the iPhone 5S. If you look at Apple's own plot of iPhone CPU power, you'll notice that it tapered with this iteration and will likely continue to taper. If you look at the desktop processor market you'll notice that Intel/AMD CPUs really have not gotten any significant IPC gains in about 3 years. The only strides have been in cramming more cores into the same packages thanks to die shrinks.

What's the biggest difference other than the processor going from iPhone 5S to iPhone 6? Apple Pay? 802.11ac? The barometer? This is a very minimal update for even iPhone 5 users. The main reason I upgraded was for the larger screen, 128 GB storage and 3rd-party apps now have Touch ID support. I almost chose not to upgrade.