Additionally, newer touch panel tech will mean the iPhone 5 is thinner. The company could use new casing materials, as well.
Says the MS analyst (via Insider): "What is clear about iPhone 5 is that Apple and its supply chain are positively surprised by the demand for iPhone 4S, which increases confidence in strong sales for iPhone 5 later this year. Overall, the supply chain looks for stronger than market growth for both the iPhone (50%+ y/y vs. market 20-30%) and the iPad (20-40% growth, higher with a lower priced iPad 2)"
Furthermore, the bank says the upcoming iPad 3 will go on sale in March with much upgraded features including a quad-core processor, LTE 4G support, and a high-resolution Retina Display at 2048x1536 resolution.