I guess the question of the screen size will be answered soon, but I just got an idea of another reason large screen is less likely (even though Engadget suggests otherwise).
If you focus on the basics if Sailfish UI, one of the main controls are the dots in top left corner (used while in deep nested pages or scrollable areas like maps). Can you imagine how irritating would be reaching the dots on a ~5" device?
I believe Jolla has thought this through, considering how much they've emphasized the single handed use (pulley menu).