I believe Apple is moving their products to use 16:9 Aspect Ratio. The iPhone 5 was only the first product to use it, next iPad, iPad 4 will be slimmer and lighter and use a 16:9 aspect ratio screen, and the rumored Apple Television will do too. AirPlay mirroring will look a lot nicer with 16:9 apps.
By releasing the iPhone 5 with a 4-inch 16:9 Aspect Ratio screen, they are forcing the developers to upgrade their apps to support 16:9 aspect ratio. They did exactly the same thing when they released the iPhone 4, they forced all developers to upgrade their apps to support Retina resolution. The next step is 16:9 aspect ratio.
Some voices heard:
I think honestly why the format is 16x9 is simply what they said in the Keynote, designed for one hand. Ideally I would like to see a wider screen but I think their intent is to keep the same form factor width wise.
I think they are paying a lot of attention to how people actually use the phone. In other words, they are practicing old fashioned marketing by focusing on benefits, not features.
I think the benefit will be with the AppleTV. You know when you do mirror mode it boxes it in a 4x3 aspect ratio. Now that would be nice when I can mirror mode it as 16x9. However I do like the 8x11 paper format of the iPad. I think that works because it looks like it's in a book form, which is easier to handle in my own opinion. I agree with you on the 7.8" for sure. I think Apple needs a $250 tablet to complete.
The current aspect ratio looks terrible on the wide screen television using airplay or HDMI as they have these black bars on the sides.
I had criticised apple on my reviews on my HDMI video (Apple Digital AV Adapter (HDMI) Full screen it with DisplayOut) previously and hope they can give a software fix to stretch the resolution display to fit the 16:9 screen ratio.
I guess Apple thinks a software & hardware fix is in order instead!
I think they are fixing that just now by releasing new models of their products, supporting 16:9 instead.
If the app uses Airplay natively it fills the screen. It is only when you do mirror mode that it does the current 4x3. If apps build in AirPlay support that 4.3 aspect ratio goes away.
Apple has started the 16:9 aspect ratio conversion of their products. The iPhone 5 is just the beginning.
Applications that built in airplay does stretch the "video" to 16:9 when it's playing but not the user interface of the application.
With the beginning of 16:9 user interface, the airplay & mirroring will be seamless on the television making it more comfortable to the end users :D
I believe most x-box, Wii, Nintendo and console games will lose to a full HD user interface air play gaming machine call the ....iPhone 5/ iPad mini.