To be clear, iLounge has a mixed record when it comes to iDevice predictions. On the other hand, everyone has a mixed record - though some successes - when it comes to iDevice predictions.
Some of the information in the iLounge report has been rumored before. For one, an iPhone 5 with a 4-inch screen is an idea that has been around for a long time. According to the report, the iPhone 5 will be longer, thinner, and have a different aspect ratio than any prior iPhone, which could cause issues for some software.
An aspect ratio of that sort might mean that current software would show up with black bands at the top and bottom of the screen. You can imagine how it would look, thinking about a letterboxed view of a movie or show on your HDTV (though obviously, not a "wide" screen view).
In addition, the site wrote about another rumor that's been popular lately: a different dock connector.
That's been a rumor that's running around for some amount of time, with the last time, prior to this one, in February. It was then said that Apple might supply a sort of adapter for the dock connector, so that some accessories (though obviously not a dock that sits flush) would work.
No one really knows. But iLounge accurately predicted features in the new iPad, ones that ultimately proved correct when the third-gen Apple tablet launched in March. The fact this report is mirroring other recent rumors lends more credence to it.