I have to disagree to a point here. The culmination of iOS/iPhone shortcomings is what make it a less capable device in my opinion. Is not being able to select your default browser a deal breaker? Not necessarily. Neither is having handicapped bluetooth, a keyboard you can't change, no drag and drop, small screen, etc.. The thing is, when you combine the shortcomings, it results in it being less capable. Sure it does a lot of the same things, but there are several things that it does not do. Over the last year or so, my smartphone expectation level has increased even more, and the iPhone seems even more antiquated to me. For example, when I wake up in the morning, I expect my phone to let me know the weather and my commute time to work as soon as I turn it on. My Nexus does this, without me doing anything. I simply turn the screen on, and there it is. If I were using an iPhone, I'd have to turn the screen on, unlock the phone, check the weather forecast, then go to maps and check the traffic. With my Nexus, it already knows I need this info, and has it ready for me already on my lock screen. I use this example to point out a difference in capability. Will everyone have this same requirement as me? Of course not. This is just one personal reason I find the iPhone less capable.
Regardless of what their plan is, in 2013 a 4" screen in a high-end smartphone is definitely antiquated. I don't think there's any way around that. Bare minimum, it should be available in two sizes if they are so hell bent on having a 4" display. With me for example, the screen size alone is enough of a reason it isn't an option.