As should be patently obvious, this prediction is not based on any inside information.
I’ve read some rumors to the effect that the next iPhone will be half an inch wider and half an inch taller than iPhone 4. I’m trying to imagine how Apple could increase the size of the screen without compromising their much touted Retina display. Apple’s always bragged about iPhone 4’s display being greater than 300 dpi, which is supposedly some kind of sweet spot where the human eye can no longer perceive individual pixels. Setting aside the possible dubiousness of that claim, it’s inescapable that increasing the screen size by a half inch on each side without also increasing the resolution would decrease the dpi to around 280 (by my very rough calculations) and basically ruin their whole marketing shtick.
So here’s my totally half-baked prediction: iPhone 5 will have a 720p HD display in order to preserve the 300+ dpi on a larger display. I imagine this will ruffle the feathers of a few iPhone app developers who’ve had to work over the past year to redesign their apps for 960×640, since now they’ll have to turn around and redesign for 1080×720, but wouldn’t it be a fantastic blow to all the competing handset makers who seem to be standardizing around qHD?