We should have to thanks to advances in technology on the iPad 2, it appears that the some of the same technology can be used in the iPhone 5 display that makes the bezel needed thinner. The iPhone 4 has a small bezel on the sides, but there’s still a few more mm of screen.
It seems that in the image the screen have kept the same aspect ratio and is basically just a few mm longer on the diagonal pushing it down, in proportion, to the home button.
We think that the Apple could use the exact same 3.5 inch Retina display, but make the casing around it smaller essentially making a smaller iPhone than before, but while still retaining the same screen size.The iPhone 5 might be a similar upgrade to what the iPad 2 was to the iPad 1.
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