2560x1600 is absolutely pointless on phones with screens the size that Apple ships. In fact, 2560x1600 is pointless for the sizes of any smartphone in existence. For someone to claim otherwise suggests that person has a fundamental lack of understanding of the technology. That resolution only makes sense for stuff like 8" tablets. A 2560x1600 8" tablet is 377 ppi. Interestingly, the 7.9" iPad mini is 2048x1536, which is 326 ppi, which is also more than fine for a tablet actually. Going above that doesn't really help, esp. for a non-pentile screen.
As mentioned, some people do want BIGGER screens, but the pixel density doesn't have to change.
While 400 ppi wouldn't hurt on a phone, 325+ is sufficient (if not pentile that is) at any mobile screen size IMO, and 500 is just stupid specsmanship. On a tablet, the ppi can be significant lower and still look great. In fact, that 2560x1600 resolution is fine on a 10" tablet.
Personally I think if Apple were to release a 4.5" phone, 720p would be just fine. It would be the same 326 ppi. I would prefer something like a 1221x688 4.3" iPhone though. Or to make it simple, just make that 4.3" phone 720p as well, or 342 ppi.