The 4-inch iPhone has been rumored for sometime now and with Apple's reported March 2016 event, it is possible we would see the device revealed there.
Today's report from MyDrivers (via MacRumors) does refer to the 4-inch iPhone as the 'iPhone 7c,' but Apple is unlikely to use that name since the iPhone 7 has yet to launch. Previous reports have referred to Apple's upcoming 4-inch iPhone as the 'iPhone 6c' and that remains a more likely name for the device.
The iPhone 6c is rumored to feature an aluminum enclosure (either similar to iPhone 5s or iPhone 6), the same curved glass used in the iPhone 6 and possibly an A9 processor. We would expect Apple to equip the device with Touch ID, 802.11ac Wi-Fi, Bluetooth 4.1, and more.