Apple's iPhone support cycle is such that there are significant downsides to getting a device from an older generation.
For example: The iPhone 4S was released in October 2011. In October 2013, Apple released iOS 7. While iOS 7 supports the 4S, it increases RAM overhead to the point that switching from app A to app B kills app A the vast majority of the time. (This is terribly annoying when you're writing, you switch to a web browser to look something up, and when you switch back the thing you were writing disappears.)
The user adoption rate of new OSes is ridiculously high. This means you will have maybe 3-6 months after the new OS comes out before apps no longer support the old one.
I use a 4S with iOS 7. I can't wait to get the new phone, iOS is so slow now on my device. I guess there aren't any problems per se except that I pretty much hate using my phone.
iOS doesn't swap like traditional OSes, although it does persist a small cache of metadata about running app instances. The file system is not particularly fast, though, so I could see low space conditions (that might trigger reclamation or defragmentation) slowing things down in general.
i have a 4s that i got in 2011 that works fine on iOS 8. frankly their support cycle is far better than with any other options. perhaps the year old phone won't last quite as long as the new phone, but it will probably last long enough to want a new phone. the 5s is a great phone and will be supported for at least the next 3+ years
The fact that Apple still sells iPhone 5S at 32Gb in addition to 16Gb means that there might still be hope for 4" fans.
If you're about to switch ecosystem and hate anything but 4", I'd get the 5S, it's still a fantastic phone with a top-class processor, top-class camera, awesome screen, good battery, and whatnot. It'll still be updated for 2-3 years software-wise, so it's more than enough for an ecosystem jump; after all, in 3 years, you might want to jump again somewhere else for different reasons.
Why do you assume that there won't be a 4" model going forward? Do you know how many of those devices they sold? Its dead in terms of development is unwarranted exaggeration at the least.
The 5S is an excellent 4" device which is more than powerful enough to run iOS8. Sales numbers will determine whether they produce new 4" models next year.
