Even though I'm waiting for my Nexus 4 to arrive I still think 4-4.3" is the best size for a smartphone screen as it can be used with one hand without having to dislocate my thumb!
Android manufacturers don't really offer a choice either as you can't get a phone of that size with top specs - particularly the screen. My phone now is 3.3" (yep that turned out to be too small) but the resolution is higher or equal to all the 4" phones today. I'm not even that bothered about the processor, I've just gotten used to high density screens and a friend's One S was noticeably fuzzy to me (as I was planning on getting that due to the good camera). Until the manufacturers make 'flagship' phones in a range of sizes to me they are not really offering choice on design - merely on price. Well I guess the Note is an exception but they seem to aiming for it to be a business phone for productivity from the advertisements I've seen.
The next generation of phones all seem to be 5" screens so it will be interesting to see how many people buy them as they can't be anywhere near as pocketable. I don't see the advantage of that size... It seems to me more of a way to stick 1080p on the spec sheet.
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Its no harder to pocket really as long as your a male not wearing spermicide pants.
The advantage is seen to those who realize what these devices have become, media consumption devices. Phone is now quickly becoming a secondary function of these devices. Now its about surfing, reading email & ebooks, music, movies, games, etc, etc.
It's literally a paradigm shift in how we see these things. Clearly they sell well enough also otherwise they wouldn't bother making them.
As far as choice there is plenty of smaller devices that are more than capable and decently spec'd. You choose to ignore them because they aren't the brand new big name toy. They function fine and can tackle the average persons needs nearly the same. Power users will see the difference but I assure you its not staggering.
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