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HTC’s rumored “M7″ flagship phone could sport a smaller screen and land on Verizon and Sprint shelves -
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Yes, and within 5 years there could be apps and games supporting 1080 on android.
Can the average human eye even distinguish between 1080p and 720p on a screen that size?  Many (though not all) people can't tell the difference between the two side by side on 32" screens without sitting within a couple feet of the screen.  How many people could actually tell the difference between the two resolutions on a 9" tablet? A 7" one? A phone display?

Seems to me that their efforts would be better spent bringing audio support on those devices up to snuff...
+Kevin Murray I agree. It's like the new 4k tv format. Aside from hd photos it's pointless! That's marketing for you. 
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