If they follow their iPad mini pattern a larger iPhone-like* device would have a 4.904" display. That would allow them to use the 264 PPI display panels already utilized in the iPad (4) whilst maintaining the same resolution of the iPhone 5.
* Uses the same iPhone and iPod Touch apps in the same way the iPad and iPad mini use the same apps.
My aging eyes might have an easier time trying to use an iPhone with a large 264ppi interface, but I suspect the market for such a zoomed UI is smaller than the market for a higher resolution one, i.e. an iPhone with a 720p, 900x1600 or 1080p display.