I believe for a smartphone (or specifically, a display that we use closer than arm’s length), around 300-320ppi is the sweet spot to balance clarity, cost of production and ease of development – I fail to see how the average person would even able to be discern details above this. In other words, if the Galaxy Nexus was any smaller than 4.65 inches, it would be mostly unusable and the cost would rise dramatically. For an upcoming product to maintain this 320ppi density with a 1080p marketing moniker, it would be useless to have it smaller than 7″.
“What this means is that when resolution increases from ~120 ppi (I prefer ppi when discussing pixel-based digital displays) to ~159 ppi fonts and icons will get smaller. This applies to all three levels of in-betweens. And displays north of ~320 ppi will continue to get smaller with no reprieve.”