Re: How? (@James)
I think the AC was referring to Jobs' vision of simple, stratified product lines. Sure, they keep the older models around, but I think the point is that the initial presentation is straightforward, there are no mystifying tables of tick boxes for people to traverse in PC World, Carphone Warehouse or wherever and the thing itself can become a desirable object in the group consciousness of consumers without caveats.
That's a policy he implemented almost immediately upon his return to Apple, starting with the Mac, and is probably a large part of what saved the company. I think they'll stick to it. If the iPhone gets larger, I'd expect the iPod Touch to get larger too and for no current generation smaller variants to remain available. No doubt they'll brand it a transition and cite the moves to PowerPC, to OS X and to Intel as evidence that they're not diluting, just advancing. Apply your own pinch of salt.
Obviously there are a bunch of ways that an iPhone screen size change and an iPad Mini would directly contradict previous Jobs keynotes. He used to do that himself, but the observation is nevertheless valid.