I think it's a psychological thing.
Like, while thinking about what kind of phone we want - a small phone sounds pretty good. But when it comes time to buy it, we start comparing phones, and we see some small ones, and some slightly bigger ones, and some really big ones. We tend to go bigger than we'd originally intended because of psychological anchoring effects.
The slightly bigger phone is seen as a slightly better phone. "not too big" we think, as we compare it to some monsters; and the key stats such as screen resolution and battery capacity sound slightly better. So we tend to buy that bigger phone even if it isn't what we actually thought we wanted.
[edit] I should say that I'm saying "we" in a totally generic way. I definitely don't do this myself. I've literally only ever owned smartphone in my life, and it isn't particularly big or flashy. I have an anti-phone attitude.