I've always assumed it was partially about reliability and partially about saving space, since water-resistant physical buttons are fairly standard components.
The phone needs to have some form of haptic motor anyway, and switching to a virtual button allows them to eliminate a complex moving part - removing one potential point of failure - while freeing up a few cubic millimeters of internal volume.
Anecdotally, the home buttons always seemed to be one of the more fragile parts of an iPhone, to the degree that many people started to use the on-screen assistive touch dialogs to avoid wear and tear.
I've always assumed it was partially about reliability and partially about saving space, since water-resistant physical buttons are fairly standard components.
The phone needs to have some form of haptic motor anyway, and switching to a virtual button allows them to eliminate a complex moving part - removing one potential point of failure - while freeing up a few cubic millimeters of internal volume.
Anecdotally, the home buttons always seemed to be one of the more fragile parts of an iPhone, to the degree that many people started to use the on-screen assistive touch dialogs to avoid wear and tear.