Women often carry their phones in their purses, men often wear looser fitting jeans, and there are enough clips and holsters and accessories (that I have too many ripped belt loops to ever recommend) out there, that the issue of a large phone not being able to fit into their pocket isn't going to be that big. Sure, I know some girls who put their phones in their back pocket, or tuck it in their bra, and a few guys with pants so tight you can see an outline of their thunderdome, but it's not the largest demographic.
Besides, with the increasing number of smartphones coming out, it's all still brand new. Phone developers are still in a trial and error period, trying to find things that work, and things that don't. If a phone is too large for your preference, don't buy it. Even if you're a fanboy of said product. If enough people find it to be too much, companies will cut back, or at least make another version (come on, how many Droids are releasing this year??) to appeal more to its audience.
Also, as a new technology, things are a little clunky right now. As time goes on, internal parts will get smaller, and so will the overall size of phones again. Give it a few years and our phones will fit into the palms of our hands again.
