According to 9to5mac, Apple is currently testing two prototype iPhone 5 models and both have displays that measure 3.95″ diagonally, with a resolution of 640 x 1136 thanks to the extra 176 pixels that have been packed in. As for the width, the screen will remain 1.94″ wide, and increase in height to 3.45 inches.
Right now we know of a few next-generation iPhone candidates in testing. These prototype phones are floating around Apple HQ in thick, locked shells in order to disguise the exterior design to “undisclosed” employees. We know of two next-generation iPhones in testing with a larger display: the iPhone 5,1 and iPhone 5,2.
Both of these phones sport a new, larger display that is 3.95 inches diagonally. Apple will not just increase the size of the display and leave the current resolution, but will actually be adding pixels to the display. The new iPhone display resolution will be 640 x 1136. That’s an extra 176 pixels longer of a display. The screen will be the same 1.94 inches wide, but will grow to 3.45 inches tall. This new resolution is very close to a 16:9 screen ratio, so this means that 16:9 videos can play full screen at their native aspect ratio.
The report also says that Apple is currently testing out iOS 6 builds that will take advantage of the extra real estate and pixels. These beta builds include a springboard (aka home screen) with 6 rows of apps (as seen in this recent mockup) – including the bottom dock – and extended UI in apps that allow users to view more content on screen. Because of the extra pixels, Apple is able to do all this without sacrificing on the sharpness of the Retina Display found in the iPhone 4/4S.
As for other hardware, these prototypes do include a home button and the rumoured smaller dock connector that was reported by iLounge, which will supposedly be between a Micro USB and Mini USB connector in size.
It would appear that the iPhone 5′s screen will very well make the jump from 3.5″ to 4″. WSJ and Reuters recently reported that Apple had already begun to place orders for 4 inch screens, with production for this part to start as early as June.