SGS3 is getting old nowadays; SGS4 is around the corner. To replace current models of SGS3 with an upgraded one would be a waste of resources.
I agree, though, flagship phones should have the latest and the greatest of everything, not skimp here and there while leading in other features. I expect their next flagship to have a gigantic battery, the best screen they ever made and a respectable sized storage, among other features. Nexus 4 is a great phone, but skimping on battery and storage were 2 letdowns I could not overlook.