updated 04:30 pm EDT, Wed March 28, 2012
Screen could simply be experimental option
Apple is developing a new device with a 5-inch Retina display, according to Japanese site Macotakara, citing a Chinese source. The new hardware will allegedly ship in 2013, and have a resolution of either 1280x960 or 1600x960. Apple is also said to be working with LCD suppliers to prepare for the device, but even the category it might fall under is still unknown.
Although another rumor has hinted that Apple might be going as big as 4.6 inches for the next iPhone, the company may be reluctant to follow in the path of phones like the Samsung Galaxy Note and the LG Optimus Vu, which meet or exceed the 5 inch mark and can sometimes be cumbersome. Apple could theoretically be working on a larger iPod touch, or the long-rumored "mini" iPad, though in the latter case recent reports have specified a 7.85-inch screen.
One possibility is that Apple is simply testing potential sizes for products it already has in the pipeline. The company is known to experiment with several prototypes for some devices before settling on a final design.