An extra half inch does make a decent difference, though I agree not a huge difference, but the extra inch and a half that the Note 2 has over an iPhone 5 does make a huge difference. From what I've seen/heard, even iPhone users have found that the extra half inch between the older iPhones and the iPhone 5 is a much bigger difference than they had realized.

Otherwise, I find you just invalidated your own argument. What is the issue with having the larger phone, that has more capability, when you are paying roughly the same price for the two phones? If you are using your phone more than as just a phone, as you mention when you say you use it as a distraction, then having the extra inch and a half makes it a better distraction -- especially when you might not always need to bring a laptop because the phone can do most of the light duty functions you would otherwise need the laptop for.