I am developing an iOS app for 4-inch screen. That means my app looks terrible on 3.5-inch screen because of images. If I published it in App Store, would it be possible to download this application for 3.5-inch iphone users? If I want to make a version of my app for 3.5-inch screens, should I just make two different projects?
No, you can't stop people with a 3.5'' device downloading, however:
You can support both 4'' and 3.5'' devices with the same application.
You need to programmatically check which device you're currently running on and then layout your UI appropriately.
As a simple example, you can check if you're on a 4'' device (iPhone 5, 5C, 5s) with the below code snippet:
#define isFourInch ([[UIScreen mainScreen] bounds].size.height == 568)?TRUE:FALSE
if (isFourInch)
{
//4'' screen detected
}
else
{
//3.5'' screen detected
}
Because iOS 7 supports devices with 3.5" screens, you can't use the only-support-iOS-x technique.
Also, there isn't a setting in Xcode or a key for UIRequiredDeviceCapabilities which allows you to make the app 4-inch only.