If that's true and the game doesn't support 4th gen iPhones, that'd cut out a lot of the iOS market.
It might even make the difference between a 'hit' and a flop.
But I'll go through my best guess for what is going on, based on my own limited experience trying to develop games for iOS.
As far as I can tell, the list of devices they've aimed for have all had one thing in common: 512 MB or more of RAM.
This is true of the iPad 2, the iPhone 4/4s, and the iPad 3 - all the iOS systems the game was supposed to support initially.
That said, the iPad 2 and 3 seem to have slightly faster processor capabilities than the iPhone 4s, and significantly faster than the iPhone 4. My guess - and it's only a guess - is that although the game would load and run successfully on the iPhone 4, it probably ran slower. Longer loading times, choppy framerate, etc. It ran, but not as smoothly as it should have.
That might be placing Cyan Worlds in a position where they'd need to optimize the game further (i.e. compromise on graphics quality) in order to support the iPhone 4/4s.