Apple should follow Samsung's business model and release 2 phones a year.
Samsung is the #1 smartphone vendor in the world. It is no accident. They may be the smartest company out there. Whether they are copying other people's products, flooding markets with products, advertising or pricing things inexpensively, they are ruthless.
They have two high end phones and bunch of other crap, but let's focus on the top of the line phones, the Galaxy S and the Galaxy Note. Notice that they release the Galaxy S around spring which is around the time iPhone sales start to slow with rumors and prospect of a new iPhone on the horizon. Then in the fall, they release the giant Galaxy Note, the ultimate anti-iPhone with it's huge screen and stylus. While I question, the wisdom of releasing a phone opposite to the iPhone release, it's substantially different enough where I don't think it get hurt by the iPhone. I actually think the Galaxy Note hurts iPhone sales more than the other way around.
I've been wanting a bigger iPhone since around the time the HTC Inspire 4G hit with it's massive (for the time) 4.3 inch screen. And year after year, Apple refuses to bring out a bigger phone until releasing the iPhone 5. Whatever you might feel about phone size, there is clearly a market for larger phones.
The market has changed. One phone a year is not enough. One screen size is not enough. They need an iPhone Mega to go along with the 4" phones. While flooding the market with products has proved disadvantageous to some companies, I think Samsung has figured out the right balance.
Apple bring out a big phone in the spring to compete with the Galaxy S and your small flagship in the fall to compete with the Note.
Apple needs to the adapt to the changing market conditions and it's competitors. The list of arrogant phone vendors that refused to adapt to disruptions in the phone market paid a big price. Don't be like Nokia, Palm, Motorola, and RIM be smarter Apple.