Preview at WWDC likely in June, followed by September launch.
What a Tall 'iPhone 5' with 4-Inch Display Looks Like
Rendered mockup of taller iPhone with 4-inch display (left) and iPhone 4S (right)
Click for larger
As had been proposed in earlier speculation, a taller display could allow Apple to add one more row of icons to the iPhone's home screen, moving to five rows per page plus the row of pinned icons in the dock at the bottom of the screen.
Increasing the diagonal measurement of the iPhone display from 3.5 inches to 4 inches while maintaining the same width as the current display adds approximately 11 mm (0.45 inch) to the height of the display. With iLounge's report indicating that the new iPhone's body will measure in at approximately 125 mm, which is 10 mm taller than the iPhone 4S, the spacing for the components above and below the display would remain roughly the same.
Rendered mockup of taller iPhone with 4-inch display
Click for larger
The mockup also shows a smaller dock connector as has been rumored by several sources, as well as a flat metal panel in the central portion of the rear shell of the iPhone, in line with iLounge's claims.
Ciccarese Design has also provided us with an interactive 3D model of this mockup, accessible via WebGL-enabled browsers. On OS X, Safari users can turn on WebGL by first navigating to Preferences -> Advanced -> Show Develop menu in menu bar and then choosing the "Enable WebGL" option from the Develop menu that appears.
It should be noted that iLounge's claims have been directly contradicted by a recent report from iMore, which claims that Apple has yet to settle on a final form factor for the next-generation iPhone but that there appears to be no change to the aspect ratio of the display and that there will be no metal panel on the rear of the device. Both iLounge and iMore have offered accurate information in the past, and thus it remains to be seen which source is closer to the mark on this round of rumors.