One of the general complaints I often hear about the iPhone is: "the font is too tiny." That's what you get when you're using a high-resolution display and you only have 3.5" to work with. Compared to Android handsets that use screens as large as 5", the iPhone display is small.
So, what's going to happen when you now have a 4" display? It appears that the screen size is not getting larger - it's getting taller (or wider, depending on your context). In portrait mode, the screen will be taller. In landscape mode, it will be wider. My assumption here is that the text will be roughly the same size when you're viewing emails in portrait mode. When you rotate the screen to landscape, you should expect the text to get larger.
The following video shows you a rumored preview of what the new iPhone 5 might look like: