Just stumbled across this interesting take on why 3.5 inches is the right size for a handheld. Obviously not everyone will agree, but it does speak to Apple's focus on the user's end experience.
And if you don't follow the link, it's an article about one-handed use of touchscreen devices, with particular attention to the area covered by the thumb:
And if you don't follow the link, it's an article about one-handed use of touchscreen devices, with particular attention to the area covered by the thumb: