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No reason to believe this rumor. There is no way Apple would make that type of decision at the last minute. Apple also thinks about systems. As in...it's a big deal to have to redesign to support multiple screen sizes. Ergo the retina screens were exactly double the pixels (per dimension) so that all the apps would look and work the same. The iPad mini was not 7", but the exact size needed to run the same iPad apps, all of them, that already existed.
The iPhone 5 did change this with a screen a little taller, and they just did that last year. Do not see them repeating. The opposite is likely to be true. Rather than continuing to sell the 4S as the cheap iPhone when the next is released, they will release a new budget iPhone with a 4" screen so that all currently selling iPhones will have the same screen size
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