I'm curious about this. A 7" phone seems a certainty rather soon -- the Note 3 will be close, and shaving the bezel off the N7 would make it more pocketable.
I look forward to it. With some changes in pocket design and more wearable Bluetooth headsets, we may be able to combine phones and small tablets effectively.
I feel like the real barrier is less technology and more social attitudes. I rarely see people using Bluetooth headsets in public, the vast majority still hold their phones to their ears when receiving a call and only use headsets in their home or car, if ever. Also, attempting to discreetly text with something that gigantic is difficult if not impossible.
That combined with how slow battery technology evolves makes me assume vast majority will be using phones as phones for the next couple decades. There has always been a niche for VoIP/SIP/Text based solutions to allow you to use other devices as phones, but I don't see any indication that it's about to break out of a niche into the mainstream.
The same people willing to experiment with this sort of thing are the same people that were willing to do so 3-4 years ago. Tech enthusiasts. Everyone else seems to be maintaining the status quo, and barring an unforeseen shift in social attitudes I don't see that changing any time soon.
