It is hard to believe that what this thread wants, a 4" higher spec device, is considered "small". Remember when Samsung released the Infuse on AT&T about 2 years ago, and the 4.5" screen was considered too big to succeed? Sammy was always ahead of the curve on this: Push the limit with a lower spec 4.5" Infuse, then the first Galaxy Note at 5", then the Mega with it's lower end features and 6.3" screen. They seem to want to see what is the smallest device they can sell as a phone without actually being a tablet. If the lower end large screen is a success, then they follow it up with a premium device with a similar large screen.
Launch the screen wars!!!
So, anyone who wants a top end 4.0" screen device, and I doubt you will ever see a smaller then 4" Hero phone, needs a manufacturer to roll the dice on it to try and capitalize on the wants of people not served by monster phones. I still think if one of these "mini" phones, like the HTC One mini or GS3 Mini, are a huge success (pun completely intended) at 4.3", then the someone will put out a flagship to meet your needs.
But the problem with a small screen device is the same as the problem with the even smaller group like me that would like a decent smart phone with a physical keyboard: The people willing to shell out the biggest dollars for the top end devices are the media hogs. Gaming, videos, streaming movies- these buyers need the top end everything in their phones as far as chipsets and also want as big a screen as they can get. Buyers who want smaller screens tend to be buyers who do not care about those top end media requirements. They just want a one-handed user experience with bright screens and a seamless operation. That can be accomplished with lesser hardware which increase the profit per handset.Just look at the Nokia offerings: There is only one device with a larger then 4.3" screen at the mid-range level, the 4.7" L625. All the rest of the mid range to low end offerings are 4.3" or smaller, the spec sheets are middle of the road, the performance are all good, and they sell with almost no real promotion. If companies can get away with that, why risk a top end device with a smaller screen when the iPhone seems to have that market cornered?