are you kidding? the future of small device iOS is plainly 16:9. the 2012 iPhone 5 and iPod touch made that move already. it's a done deal. it's plainly irrevocable. all new apps are being optimized for that screen aspect, and old ones updated for it. (while the iPads remain at 4:3).
and the whole point of a new iPhone lite or whatever it's called would be Apple would cease selling the older iPhones entirely. instead it would always have a "brand new" product to offer at that lower price tier (but same profit margin). that obviously is a stronger market position than offering "last year's model at a discount"
I agree with most of everything you said but I don't think they're going to give this low end phone the same 4 inch screen that's on the iPhone 5.
If they did then who would buy an iPhone 5 for twice the price when the iPhone lite you speak of is pretty much the same thing for cheaper.
Although you may not agree, screen size could be a differentiating factor between the cheaper iPhone and the iPhone 5.
Mind you most cheap androids sold in Asia that analyst want Apple to compete against have 3 inch screens and specs barely better than the 2008 iPhone 3G...
Apple already has a better 3.5 inch screen and 700,000 apps that "just work" with it.