A new report was released today by KGI's Ming-Chi Kuo, a reliable source with a good track record of what or when, stating that Apple's much-anticipated 4-inch iPhone will “resemble an upgraded iPhone 5S”, but will get some new internals. He also states that the body of the phone will feature similar curved-edge glass to the iPhone 6/6S. You can think of it essentially as a cheaper-speedier-more-colorful-and-jazzy iPhone 5S.
Kuo expects the new iPhone to get an A9 processor and NFC chip to support Apple Pay, so kind of like a mini 6S in a way. However, previous rumors have suggested that Apple will be cutting out 3D Touch from the rumored phone, so don't get your hopes up about that.
Additionally, Kuo says that the camera on the 6C will be identical to that in the 5s, so no 12MP 4K shots with this one guys.
As previous rumors have stated, Kuo believes that the new phone will feature a metal case and will be available in at least 2-3 colors.
The reports suggests that the phone will be priced at $400-$500, cheaper than the iPhone 5C was at launch ($549), and will account for 8-9% of next year’s iPhone sales, but says that there is still good reason for Apple to launch it. There's still plenty of demand for a 4-inch iPhone, as the iPhone 5S is still very popular amongst consumers. Plus, it will help Apple extend its penetration into emerging markets and consumers on tighter budgets. And with Apple rumored to include Apple Pay in the new iPhone is just more strength for the Apple ecosystem.
Kuo believes that while the usual seasonal effect will see iPhone sales slowing early next year, the new model could reduce the scale of that slowdown.