The smartphone pixel density race really kicked into gear with Apple's retina iPhone 4. Suddenly, the amount of detail you could see on your smartphone screen became the most important aspect of actually buying a phone. But, a few years on, we're extremely close to reaching the point where it really doesn't matter any more.
Anandtech has a great discussion of the merits of the pixel density race, and the equal downsides of ever-increasing PPI -- such as increased power consumption from necessarily more powerful backlights and higher per-pixel voltage.
Here's arguably the most important part:
For smartphones around the display size of 4.7 to 5 inches in diagonal length, this effectively frames the argument around the choice of a few reasonable display resolutions with PPI ranging from 300 to 600. For both OLED and LCD displays, pushing higher pixel densities incurs a cost in the form of greater power consumption for a given luminance value.
It's a bit heady -- there's talk of arcminutes and relative pixels per degree -- but the takeaway is that there's probably still a noticeable advantage in moving to a 2560x1440 pixel 5-inch smartphone over a current 1920x1080 pixel panel.
Beyond that point, there's very little good reason to keep increasing display resolution -- you just won't see a quantifiable difference with the average human eye.
So the next crop of Quad HD phones may well be the highest resolution displays we see for quite a while; manufacturers will probably focus on colour and power consumption and black levels instead of racing to higher and higher resolution figures. [Anandtech]