When the original iPhone was release, 3.5" was one of the largest sized screens on the market. As an example, most Windows Mobile phones were running 2.8" screens.
There is no doubt that they go larger, probably up to 4" and not over that. The apps that count will have to do some recoding for the new aspect ratio but so be it.
It’s really not about screen size anyway, Apple knows they must have LTE and a larger battery in the next iPhone to remain competitive with Android devices, thus needing a larger case. The larger screen is just being used to fill up that space. This will happen, get ready for it in about four months because it’s coming and it’s about time.