I think to most people height is the least important part of a phone's size. Width, thickness, and weight are what determine how big the phone feels in you hand, and in your pocket. Yes, the phone is a half inch longer than the GS2, and perhaps 1/4" longer than the Droid X. I can tell you that having my DX stretched a quarter inch wouldn't bother me at all.
For people coming from a 3.7" or a 4" phone I can see how this would seem really large (if a 4.3" phone already seems big, then I guess even a very small bit of extra size seems ridiculous) but lots of people like 4.3" phones, and for those people the GNex will be a perfectly reasonable size.
I'm not saying I completely disagree with you, but you can't deny its a huge phone. I just have a problem with the fact that the software buttons were supposed to shrink the top and bottom bezel and they've seemed to get bigger.