The direction of smartphone growth is not just bigger.
The general direction is towards bigger, but all the factors, including cost come into play.
The current reigning ‘king” is the Samsung Galaxy S4. It has a big, bright screen, modern software, an excellent camera, and LTE data connection.
The HTC One is a close second in the Android community. I don’t know enough about the current iPhones to compare them  in this discussion fairly.
There is a new Samsung Mega with a 6.3 inch display, feeling out the gap between phones and 7″ tablets. It has a little cheaper 720p display and not “super amolid” and second-from-the-top processor. But it’s perfect for butter-fingered people like me, who need fatter keys for texting and can use a little more real estate for watching a show or two occassionally over the air. Most reports are that it feels a little rediculous as a phone and doesn’t fit most shirt or pants pockets. Some reports say it will fit in a pant pocket but come out if you sit down.That makes it a purse phone or a metro-bag phone, which is probably the kiss of death until pants pockets evolve (as they will over time).
It sells for $450 unlocked on Amazon compared to around $650 for the S4. Maybe next year we’ll get the 1080p, super amolid display with the 8 core processor….  This model is just putting its toe in the water to “test the water”. It does not have lte data connection, again the kiss of death. My guess is that when the longed-for Galaxy Note 3 comes out, it will have all these top of the line features, including the big, bright, shart screen.
The Note 2 is still held in high reguard (by people like me)for its bigger screen, modern software and fast processor and LTE data connection.

The S4 has a ruggedized version with slightly different parts. It has a tougher back shell, a few minor missing software features and a slightly weaker camera. But it will easily survive being dropped into the toilet and even has an underwater mode for the camera. (Don’t think of taking this into the ocean or even the pool.) But many people would consider the ruggedness a fair tradeoff for the ability to stop a movie when you look away.

I’m using the Nexus 4, whose big claim to fame is top-of-the-line features (except LTE) at half the price. Since I have good WI-FI coverage at home and other places and T-Mobile has decent non-LTE coverage in the Portland area, I’m not suffering. I LOVE that it has the very latest Android 4.3. I may hack the radio and do a software installation of a so-called “hybrid” radio to turn on the LTE features that are physically in this phone but were never sent through the approval process. (It’s summer, enjoy the weather for now and save that activity for when daylight savings time goes off.) Most of the world doesn’t have good data coverage that is non-LTE, so the lack of that feature is the kiss of death if you’re trying to compete in the best-of-best category.
All this brings up the “were are we going” question. Since I’m fat-fingered and I wear glasses I am waiting for continued improvements in the voice interface. I would like a phone to be developed for blind people, i.e.., no screen. Not that I want “no screen’ but I want a completely voice-activated interface for when you’re driving or you don’t want to type a text message. We’re 90% there now, but I want it easier to have my Blue Tooth hands-free device know to just read me the text message someone sent while I am driving.
I suspect many of these things will be in Android 5. I feel it is definitely going in that direction. But do you realize what a shake-up it would be to the market if cell phones went back to being phones instead of media devices? A lot of people hav big plans to sell you all kinds of books and movies and TV series.

Whenever I ponder a voice interface I think about the noise polution in our daily environment. I doubt bars will ever quiet down. It is the nature of alcohol that they sell more alcohol when it’s a noisey clutter of sounds. Even food courts love the higher noise levels. Even “soothing sounds” are loud and intended to drown-out or mask sound clutter in the urban environment. By the way, do you know how Fabreese works? It makes your nose not work. So if you spray it on your dog’s bed, you dog is temporarily “blind” in its nose. He depends on his nose and you wipe it out. For similar reasons I prefer fresh air to breath and quiet neighbors. I cant mentally adjust to the noise, air and (horrible) water of places like LA.

Believe it or not, I’ve talked about quiet spaces before, just as I’ve talked about dimly-lit places for viewing your photos in a McDonalds. I was (and continue to be ) ahead of my time in these regards because it goes against the trend to sell you music in Starbucks and have a bright and cheery McDonalds.

 But you can’t dictate a text in a noisey room or listen to one either. Gadgets that fit on your ear and mouth are slowly becoming more common. You could even make a claim for the Google glasses that have an always-on screen (like a Borg) and have something for the ear and mouth.