I have a Garmin ForeRunner 610 running watch (it has a bicycling mode as well which I also use) and have the Wahoo Fitness iPhone 4 bike case (this provides water resistance, shock resistance, and easy mount system and an ANT+ radio to talk to sensors). Currently I use a Combo Speed/Cadence sensor and a heart rate monitor - I may consider a power meter in the future if I stick with cycling long term.
I am moving toward iPhone 5 as my next phone and had a quandry since I wanted to keep my ANT+ sensors and there's no good solution for ANT+ radio while mounted on the bike for iPhone 5.
A company called 4iiiis has a solution that I'm investigating called the viiiiva heart rate monitor - this is a bluetooth smart HRM strap that also acts as an ANT+ gateway - receiving the ANT+ data from the other sensors and passing it through to the iPhone (4S or 5) as bluetooth data... early reviews are that it works very well, and it will allow me to ditch the 4S and move to the iPhone 5.
For me, I agree that the iPhone on the bike is a bit larger than idea... for this there is still the possibility of using the Wahoo RFLKT - a bluetooth display/control pod that is about the size of a Garmin 500/510 (a little smaller I believe) - that mounts on the handlebars so you can stash the phone away. This has the added benefit of ALSO extending battery life significantly since the phone's display can remain off.
Ultimately, the market is likely to be large enough that there will be several "winners" as everyone has different "must have" features.
For me, the biggest must haves are
1) long battery life - I solve this today with an external battery pack for the iPhone 4S - which will also work with the i5 - I can ride all day and still have battery left - even with the display on all the time.
2) Complete computer independence. I have become spoiled by the Wahoo ANT+ radio/Garmin watch integration. I can download all workouts from my watch to my iPhone and upload them to the various online services (garmin connect, map my ride, strava, runkeeper) that I use as well as archive the raw data at Dropbox and then view the results on dedicated iPhone/iPad apps
Until there is a bike computer that allows
#2 I'll probably stick with the smartphone option.