According to KGI Securities analyst Ming-Chi Kuo, who is often correct with his Apple predictions, Apple will release a 4-inch iPhone 7 for people who think the iPhone 6(s) is too large. 
Image from article.
It will be the same size as the iPhone 5s, but will be as wide as the iPhone 6. Kuo predicts it will have the newest A9 chip, but will not have the same capabilities as the 6s (3-D Touch).
The iPhone would also be encased in metal as did the iPhone 6(s).
Goldman, David. “IPhone 7?: This Could Be the next IPhone.” CNNMoney. CNN, 5 Nov. 2015. Web. 06 Nov. 2015. <http://money.cnn.com/2015/11/04/technology/apple-four-inch-iphone/index.html?iid=obinsite>.