Based on the rumors so far, common sense would suggest that Apple replace its iPhone 4S with the low cost iPhone 5C and keep the iPhone 5 alive in between. This would be sensible mainly because this lineup would mean that all iPhones Apple sells will have a 16:9 aspect ratio (and even better, all of them will have a 4" screen) and the lightning connector. This would be the opposite of fragmentation in Android and will do Apple a lot of good in mitigating developer headaches for developing for different aspect ratios (and screen sizes, aspect ratio being the bigger of the two factors as different screen sizes with the same aspect ratio are still manageable, so a potential bigger screen iPhone in the future is still possible?). Not to mention the accessory makers' woes this line up will solve, as of now the iPhone 5 is the only iPhone that has a lightning port and all other older iPhones have the 30 pin dock connector.
So based on these facts, it is really surprising to hear form this report than Apple will discontinue the iPhone 5 for the low cost iPhone 5C and let the iPhone 4S live. If this does happen, then iPhone 5C will not be as low cost as people have expected and that Apple will still have a line up with two different aspect ratios and two different connector ports! Though I think this is unlikely, there have been some earlier reports suggesting the same, that Apple might discontinue iPhone 5 and retain iPhone 4S. Either way there would have to be a strong and definite reason for Apple to discontinue its most popular iPhone model (iPhone 5) and neglect the above mentioned advantages of a 'uniform' line up of iPhones.