A good friend of mine has an S3,and i thought it was way too large,and actually using it was nowhere near as intuitive or as user friendly as an Apple product.
A 4" screen is perfectly fine,besides,they have a tablet for things like movies etc,and an Ipad Nano coming, so why would they make the phone screen bigger?
I know it dont look much different, but its whats inside that counts,and from what iv seen,its pretty decent,and im sure the look and feel of it will be superb, as it is with all Apple products, im yet to come across one that feels cheap and nasty. It feels well engineered, which is more than can be said for some rival products.