Dubbed the iPhone 5se, the new model is basically an upgraded iPhone 5. It's rumored to include variations of the A9 and M9 processing chips found in the iPhone 6s, indicating that the 5se will feature "always-on" Siri capability. The new phone is also expected to have a curved glass display, new camera features, and Apple Pay.
Storage capacity will also likely increase. While it appears that a 16 GB model will be available, it sounds like the next step up will boast 64 GB—twice more than the 32 GB offered with the iPhone 5s.
The iPhone 5se is expected to be officially announced in mid-March. Apple will probably release the phone shortly thereafter, at a price consistent with the 5s, about $450 for the 16 GB and $499 for the 64 GB.
Apple will discontinue production of the iPhone 5s once the 5se hits. The 4-inch model will also likely supplant the iPhone 6 and 6 Plus, so Apple's 2016 lineup is presumed to include the 5se, 6s, 6s Plus, and the iPhone 7 and 7 Plus (or whatever Apple decides on naming its newest flagships).