The iPhone 5 is about 3, 3 1/2 months away if the annual refresh cycle runs true to form, and rumors are beginning to ramp up, just as production will in a few months. The latest appears to have shown up on a Chinese site that resells iPhone parts, as of Feb. 24.
The purported part shows what looks to be the iPhone 5's digitizer panel. From the appearance of the part, it looks like Apple is reducing the size of the bezel in such a way that the screen would extend nearly to the edge of the iPhone 5. Assuming this is a real part, this could lend credence to earlier rumors that Apple was moving the iPhone 5 to a larger, 4-inch screen. However, there's no way of knowing if the part is real, or what the actual screen size would be.
The iPhone 4 comes with a 3.5-inch screen, which has become somewhat undersized in comparison to the 3.7-, 4.0-, 4.3- and even 4.5-inch screens of current Android phones. Of course, most people are perfectly OK with the current-sized iPhone displays.
That said, the trend is for larger screen sizes, as they make it easier for a larger audience to read. Apple would, of course, want to maintain the iPhone's "retina display" resolution, and thus would have to increase the number of pixels on the new iPhone.