This is actually a pretty good argument for why Apple *could* call the next iPhone the “iPhone 5”. No, it doesn’t make sense on paper (it’s the sixth generation of the device), but the fact of the matter is that most people are calling it “iPhone 5” already. It’s not impossible that Apple pulls a “it’s called that because it is” move.
Having said that, I still expect it will just be called “iPhone” or “the new iPhone” — just like the iPad (and Macs, for that matter). The argument that Apple won’t drop the number because they need something to append “S” onto — if they do an iPhone 5S, for example — is silly.