I think Apple will be forced by market pressure to make the next iPhone with a larger screen (somewhere between 3.7 and 4.0 inches, unlikely to be as much as 4.3 inches), but the same number of pixels, 960x640. Android has a key differentiator with their larger displays, and Apple needs to nullify that advantage. They dont't advertise the specific 326 PPI in their marketing for the iPhone 4's Retina display; even with a slightly larger display, the eye would be unable to distinguish individual pixels, keeping the "Retina" moniker. I really doubt that the pragmatic designers at Apple really hold 3.5 inches to some Platonic ideal.
I also think Amazon is going to do a very successful 7-inch tablet.
In the words of Steve Jobs, "It isn’t the consumers’ job to know what they want." But after testing some iPhone screenshots on a 4.0 inch, 800x480 Android display, I liked the look and feel of it.
I also think Amazon is going to do a very successful 7-inch tablet.