The rumours are flooding in now - 9to5Mac is reporting they have independently heard that Apple is testing multiple next generation iPhones at the moment and at least 2 of the devices have a new display.

Both of these phones sport a new, larger display that is 3.999 inches diagonally.  Apple will not just increase the size of the display and leave the current resolution, but will actually be adding pixels to the display. The new iPhone display resolution will be 640 x 1136.  That’s an extra 176 pixels longer of a display.  The screen will be the same 1.9632 inches wide, but will grow to 3.484 inches tall. This new resolution is very close to a 16:9 screen ratio, so this means that 16:9 videos can play full screen at their native aspect ratio.

Along with the new screen they have also heard that the "Home" button will remain, while the dock connector will be shrunk.