Not completely true. The Note was a non flagship with a huge screen and it was insanely huge hit. If the Mini is not a hit that is the market talking.
Heck the Note drove large screens more than anything else.
I'd disagree with both statements. The Note was a flagship and it wasn't an insanely huge hit.
The specs on the Note were equal to or better than either the International or US SGS2, launched in the same calendar year, which, IMO, puts it in to Flagship territory.
Just prior to the launch of the Note 2 (September 2012), it sold 10m units worldwide (The Verge, August 2012:
http://bit.ly/NHhNno), which means it moved about 1m units a month. I might be a bit jaded, but I don't consider that an 'insanely huge hit'. For comparison, the SGS2 sold 40m units in almost two years and the SGS3 sold 50 million in only a year.
Not that I'm trying to say the Note's sales were BAD. I simply disagree with your summation of the device's market success. I would probably classify it as a 'surprising hit' and would argue that the SGS2 with it's 4.3-4.5" screen and the SGS3 with it's 4.8" screen did more to "drive large screens" than the original Note did.
Aside from all of that, I do believe that the Android market's large screen device sales are biased a lot by the lack of acceptable devices on the lower end of the spectrum. You simply
CAN'T choose a Android device under 4.5" (and haven't been able to for the last two years) without sacrificing important features. Be it screen resolution (RAZR M) or processing power (HTC First). The RAZR M would have been a great device at the time, but was saddled with a 480x800 display. The HTC First's display would have been great, but came out at a time that quad-core Snapdragons were hitting the market.
If I were to choose an Android phone today, I wouldn't consider any device other than a HTC One, a SGS4 or a Nexus 4. I simply couldn't consider anything else based on hardware specs.
I'll throw in some more recent personal experience here. I loved the size of the Lumia 521. It was great to hold and felt really good in the hand. But I moved on to a Lumia 920. Why? The camera was better. The screen was better. More RAM. Front facing camera. More storage. Faster processor. The downside is that I felt the device was too large. I would have loved a Lumia 920 in a Lumia 520 body.
Now, the same applies to the iOS ecosystem. The sales of smaller screen devices that would show that people prefer smaller screens is skewed because that's the only choice for iOS. I loved the design of the iPhone 4. I thought, and still do think, it's an excellent design and feels better in the hand than the iPhone 5. But I still like the iPhone 3G/3GS design better than that. But I can't choose the iPhone 3GS or the iPhone 4S. The iPhone 5 is the default choice simply because it is exponentially faster than either of those. You'd be completely dumb or just too poor to choose the 4S or 4 at this point.
Ideally, and this goes for all three device ecosystems, I should be able to pick a device that feels good in my hand without sacrificing anything. For instance, I'd love a larger iPhone, but only slightly larger. 4.3... 4.5 inches TOPS. If the iPhone goes overboard with screen size and releases a flagship device in 2014 at 4.7, 4.8 or 5 inches with no smaller equivalent, I'll give serious consideration to an alternative device at that point.
I also don't believe it's in Apple's best interest to chase the screen size slider. I don't believe that increasing the screen size is going to draw Android users away from the platform in significant enough numbers.