@jragosta "I doubt it. It undoubtedly costs a lot less to make a 4 or 4S than a 5. And the selling price difference is not that great (say, $649 vs $749). It may even be that the margins are greater on the older models (but revenue is lower, of course)."
Economies of Scale. If the iPhonne 4/4s was being produced at the same levels as the iPhone 5, then it would be plenty cheaper to manufacture, but the sheer fixed cost of running a production line for a smartphone is so high, the manufacturing cost is higher than you think, even if on paper, the price of the components isn't all that much.
I suspect that I know quite a bit more about manufacturing than you do - considering the variety of multimillion dollar manufacturing companies I've run.
First, the cost of components is about 1/3 to 1/2 of the selling price, so it's not insignificant-especially given the rate of decline of prices for electronic components. It's not hard to believe that the costs have dropped by enough to make the margins acceptable. Heck, the CPU alone is probably less than half the cost of the iPhone 5's CPU.
Second, there's also production experience that you're neglecting. As you make a product, you get better at it, improving productivity and yields. Apple has been making the 4 and 4S a lot longer than the 5 and the assembly cost is therefore probably also lower.
The $100 difference in selling price between the 4S and 5 is only about 12%-20% of the selling price. It is not at all hard to believe that they're at least that much less expensive to produce.