The iPad has bigger pixels than the iPhone. Ignoring the 2x retina size, it is 163/inch on the iPhone vs 132 on the iPad. The iPhone has pixels 81% the size as pixels on the iPad.
All the buttons, controls, and lists are the same size in pixels on the two devices, so on the iPad they are a little bigger. What if they sized down the iPad to the same pixels per inch as the iPhone. Still a totally usable size as we prove every day by using iPhones (no finger-sanding required!)
Multiplying by 0.81, the rectangular screen dimensions on the iPad change from 7.76" x 5.82" to a smaller size of 6.28" x 4.71".
It's interesting that when you throw those numbers into the good old Pythagorean Theorem, you get a diagonal size of 7.85". Exactly the size it's been reported that Apple has been buying. It's possible the sources of the report can do math too, but if it is true about Apple buying screens that size, it exactly fits a smaller iPad with a pixel DPI that matches the iPhone.