Modern phones are all phablets and it sucks but it's the only format they offer. Smaller phones are nicer to hold and nicer to use for everyday tasks. My thumb can actually reach things. At least AI will no doubt reduce the need for pressing buttons.
Manufacturers want phones to be thin so the only way to fit in the battery life is for the whole phone to be larger. In case you didn't notice it's really really difficult to find a side on photo of the iPhone Duo closed. They don't want to show the thickness.
Note that every time a company comes up with a choice between a smaller phone and a larger phone (up to some limit when you get into phablet territory), the larger phone sells in much, much higher numbers. Apple themselves tried the Mini, it sold at best a few percent of how well the regular phones sell.
While you, personally, might prefer smaller phones, and that's a perfectly valid preference, you are very much in the minority.