Does Apple's naming scheme for iPhone need to change?

Since 2008 Apple has introduced a new iPhone design one year and then followed it up with an S-variant the next. iPhone 3G was followed by iPhone 3GS and iPhone 4 was followed by iPhone 4S. It's gotten to the point where many people are already assuming the next iPhone will be the iPhone 5s. Almost a month ago Rene wrote an article examining whether this iPhone 5s assumption could become a problem for Apple, and pointed out some ways Apple might already be moving to solve that problem. Now Apple's former ad guru, Ken Segall -- who was responsible for naming the iMac -- has shared some of his own thoughts on the matter:

More important, tacking an S onto the existing model number sends a rather weak message. It says that this is our “off-year” product, with only modest improvements. If holding off on the big number change achieved some great result, I might think otherwise.

I've talked to a lot of people who say they wait for the new model, or they wait for the S upgrade, but don't buy both. Is that really a problem, though? Is there any evidence to suggest Apple really intends for most people to buy every model, rather than just the next new model after their (typically 2 year) contract expires? If you go from iPhone 4 to iPhone 5, or iPhone 4S to iPhone 5s, what exactly is Apple losing out on?

Source: Ken Segall