This is the point of resolution independence. Increasing resolution only shrinks graphical elements if the operating system isn't smart enough to render them using more pixels. With good resolution independence moving a higher resolution screen will make everything look sharper (higher pixel density) but not significantly smaller (same physical size).

Compare the screen on the iPhone 4 to the iPhone 3G. Graphical elements are the same size on both but the iPhone 4 has twice the resolution.