One thing I don't see pointed out much is how the iPhone is just about as wide as iPods with a docking connector (dating back to 2003 with the 3rd gen.)
Specifically, the original iPhone was 1.1 mm narrower than iPods, and iPhone 4 is 3.2 mm narrower.
I definitely think the iPhone is the size that it is because the iPod was also around the same size. It's entirely possible they were both part of an overarching plan in the transition from "Apple computer" to Apple, the shiny thingy consumer company. Some considerations for the form factor would have been similar for both - eg, able to be manipulated with one hand, fits in the pocket, consistency and compatibility with third-party ecosystem.
Specifically, the original iPhone was 1.1 mm narrower than iPods, and iPhone 4 is 3.2 mm narrower.