I don't know why people are whining about this (ok, ok, I know, "people like to whine").
The "dsi phat" doesn't just have a bigger screen, the unit itself is much bigger (for obvious reasons), so there's a clear tradeoff between screen size and portability. Many/most people who are happy with the existing DS/DSi won't want to carry around the bigger and clumsier Phat, but people with vision problems may find it a welcome alternative, and people who avoided buying the original because of the small screen may be tempted by the Phat.
So really it's an attempt to widen their audience and offer alternatives for people with different needs. This seems quite reasonable to me...