He showed "Real Racing 3" and claimed the new phone offers "console level graphics."

The new phone also has faster wireless, including the addition of LTE wireless, which is also coming to Amazon's new Kindle. LTE offers a theoretical maximum download speed of 100Mbps, Cook said.

A big change is a new connector to replace the pin socket used since the first iPhone. Called Lightning, the new connector is faster, but it means users who want to plug the iPhone 5 into an older accessory, such as a speaker dock, will need to use an adapter.

The bigger display size also creates a slight hiccup: Existing apps now have to run with a black border around them to fill the screen.

But the new display offers several benefits too, besides being larger. It has a retina display of 326 pixels per inch and 1136-by-640 resolution, and it's "stunning," according to Schiller. It provides 44 percent more color saturation and the touch sensors are integrated into the display itself, making it 30 percent thinner and giving a sharper image with less glare in sunlight, Schiller said.