Yes, people will buy them. It is a substantial upgrade, especially for those with anything other than an iPhone 4. There is a whole group of people waiting to get their upgrade right now. Some will hold out until iPhone 5, but the sales of iPhone 4s will still be great. Chances are OVTI will be in iPhone 5 as well.
Silly question! The key is the product line trend NOT any one model number. A person who loved their last two generations of iPhone is a locked in customer for what ever is the newest iphone model when their contract is up for renewal.