My case isn't as extreme as that. I have a Galaxy S2, and before getting it I thought I'd find the screen too big, but it actually fits my hand very, very well. I can write a quick message while walking on the street using a single hand without any problems. That size (4.3'') and below works perfectly for my hands. It also fits well in my pocket.
I used an HTC Titan (4.7''), and I hated it. The screen is big enough that, to type single-handed, I need to place the phone uncomfortably over my fingers, not my palm. It didn't work for me.
Now, if I look at the market, all the phones I'd consider an upgrade over the S2 have gigantic screens. One X, Galaxy S3, Optimus 4X, all are 4.7''+. The only quad-core phone under that size is the Meizu MX 4-core, with that weird screen resolution and weirder iPhone-like OS.
The point is: there is a market for different form factors than the current trend, and the manufacturers aren't listening to it. You want an Android flip phone. I want a smaller screened phone with all the bells and whistles. Some people want a good-spec'd phone with a sliding keyboard. Others may want a BlackBerry/Treo/Nokia E71 form factor. Or even something like the Nokia E70. We used to have options when we went shopping for a high end smartphone; now the options are "an iPhone, or an assorted variety of huge-screened Android slabs" (or Windows Phone, but that's not an option anymore until WP8 comes out). Why can't the manufacturers give us the choice anymore?