I have a Galaxy Nexus (4.3") and I couldn't go back to a smaller screen.
I'm not trying to rag on iPhones because I'm sure the 5 will be a great device and sell just as well as the others, but personally I find an iPhone to be very small now. We'll have to wait and see what the new form factor is like.
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I definitely want a larger screen on my next phone (I have an iPhone 4 now), but I hear you on the pocket thing. I'm surprised nobody has found an elegant way to make a smartphone into a flip phone. The flip would protect the glass in your pocket and take up less space. It would be awesome.
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It would make it a lot thicker and everybody seems to be racing to have the thinnest phone. Personally I would be okay with a bit more bulk for a bigger battery.