Apple typically has one major refresh of the iPhone every two years, with speed improvements in between. For example, the iPhone 4 was a major update to the iPhone 3GS (new design, Retina display, etc.), and the iPhone 4s was a minor update to the 4, mostly concerned with speed improvements and Siri. One of the major complaints that people initially had with the iPhone 5 is that it wasn't as big an update as many anticipated.
I think Apple did a good job of updating the iPhone, especially the hardware. Almost every weak spot on the now-venerable iPhone 4s has been improved upon.
No longer is the iPhone glass front and back a design that made it prone to crack when dropped. The iPhone still retains its all-glass front, but the back is almost all aluminum, with two strips of glass on the top and bottom. The band running around the phone matches the color of the back plate, so only the white iPhone 5 has the same silver band as the iPhone 4s. The black version has a "slate" backplate, which I really like.
Moving around the device, the front of the phone obviously houses the display, earpiece speaker, front-facing camera, and home button. Something to note, however, is that the camera is now dead center, above the speaker, as opposed to on the side of the speaker, as it was in the 4 and 4s. There is nothing on the right side of the phone, save the nano-SIM card slot. The volume buttons and mute switch are on the right side of the phone, and the sleep/wake/power button is on top, as always. The bottom of the phone houses the microphone, speaker, and the new Lightning port, which I'll talk about later on in the review. The back houses the camera, flash, and secondary microphone, which is used for noise cancelling.
Besides the specifics, the iPhone feels really good in your hand. It's x% thinner (moving from x.x mm on the 4s to x.x mm on the 5), and x% lighter (from 4.9 ounces with the 4s to 3.9 ounces on the 5). The lightness is actually stunning, especially compared to the iPhone 4s. It wasn't as big of a difference coming from the Galaxy Nexus that I've been using for most of the past year, but when I hold one of my friends' 4s now, it feels like a brick. I'm less excited about how thin it is, though.
It's still appreciated, but before I received my device, I had thought that I'd rather that Apple put a HUGE battery in a body the same thickness as the 4s and get some crazy, the iPhone is available on Verizon, AT&T, and Sprint (as well as unlocked) in the US, with varying carriers in different countries. It comes in black and slate or white and aluminum* (check actual name). It also comes in 16 ($199), 32 ($299), and 64GB ($399)* (check prices) storage options, and (as always) there is no storage expansion option, so you’re stuck with what you get. Something to consider now is getting a smaller storage option and saving some money because you can move to the cloud and stream on some things (like music) that would have previously taken up lots of space on your device.
The iPhone also has some impressive guts (at least relative to previous iPhones). It has a new, dual-core A6 processor running at an estimated 1GHz (Apple doesn't release clock speed), and 1GB of RAM. While this may seem lacking compared to its Android competition (some of those are running 1.5GHz quad-core processors with 2GB of RAM), Apple's philosophy is the specifics don't matter, as long as the experience is still fast. I have to agree with them. Consumers don't care what the clock speed of the processor on their phone is, but they do care whether it lags or not. It has a GPS chip, and it supports WiFi 802.11 a/b/g/n on the 2.4 and 5GHz frequencies, as well as 3G and LTE on GSM and CDMA networks, plus HSPA/HSPA+ on GSM networks.
The lightning port is the replacement to the venerable 30-pin connection used on every iPhone, iPad, and almost every iPod to this point. It's much smaller; it's about the size of a microUSB connector. It's also all-digital (whatever that means), and it's reversible, so you don't have to worry about jamming it in the wrong way anymore. Don't worry though, you'll "only" have to spend $30 on an adapter for all of those 30-pin cords that you have acquired in the last 10 years.
Apple has a reputation for making amazing displays. They were the first company to go past 300ppi in a phone with the Retina Display on the 4s. They kept the same 3.5" panel in the 4s, but in the iPhone 5, they're upping it to 4". They changed it to a 16:9 aspect ratio (1136 x 640, up from y x 640), meaning that you can now watch videos in fullscreen mode without shaving off anything from the sides.
One of the few marquee improvements in the 4s over the 4 was the camera, which was simply stunning. Only a few improvements have been made in camera quality in the iPhone 5, but they're important improvements: better low light performance, among other small tweaks like making the lens physically thinner to fit into the body of the device.
If you've used the iPhone for awhile, you're happy with it, or if you're heavily invested in the Apple ecosystem, and you want to upgrade, get the iPhone 5. If you're growing tired of iOS and are looking for something new and fresh, either go for Android or don't bother upgrading to the iPhone 5. Also, if you don't want to put the time into customizing an Android phone to truly make it yours, the iPhone is probably the better phone for you.