The headphone jack removal rumor keeps bubbling up in places as it moves through the layers of reporting. A podcast I listen to brought up another angle.

A headphone jack on the outside looks like a circle, and often on phones is helping to illustrate the thickness of the device. It's important to also remember it's a cylinder needing to occupy a fair amount of internal space. That plug and jack has already shrank from it's origins from the quarter inch (6.35mm) size to the mini headphone jack popularized I believe by the Walkman.

Getting rid of that intrusion into the interior space of the phone would allow a battery to increase in volume without changing the thickness of the device.

iFixit's teardown of the iPhone 5s has a good photo illustrating this. The headphone jack is on the bottom left, and the top of it touches the battery. It looks like design wise that dictated some other factors there, with some space on the right side being used for the speaker cavity. The iPhone (and many other devices) avoids placing the headphone jack directly under the screen.

Current Apple rumors claim that an iPhone 5 sized device is going to return to the lineup with iPhone 6/6s like features for those who prefer smaller devices. There's a chance this headphone rumor might be verified as true for that device first in March, ahead of a possible iPhone 7 later this year.