The thing about small screens is that they're easier to manipulate, especially if you only have one hand. They fit in more places, and are in general just nicer for use. However, the smaller the phone, the less components that can fit in, especially when a battery takes up a large portion of that space. On the contrary, if a phone is larger, you can do more at once on any given screen. Samsung has added a one-handed mode to their newer devices where it will reduce the size of the screen and direct it to either the left or right-hand side of the screen so that you can control the phone entirely with one hand, which is a nice solution to the issue.
Smaller phones are disappearing faster and faster though as people want to be able to watch movies and take photos and browse the web, though. We'll get to the point that any phone under 4" won't really be a thing anymore, and larger phones, even phablets, will be the most popular.