Do we know the configuration that will be coming? The report here
http://www.topgear.com/uk/honda/jazz/road-test/1.5-hybrid is for 1.5 litre and says 83 mpg. the engine would use the Atkinson Cycle which should improve efficiency at the expense of power output ( which could be why a capacity increase is considered necessary. However, given the power boost provided by the motor I don't see the need for a bigger engine for those who are seeking economy over performance.
Some months back there were some rumours circulating about Honda working on a 1 litre 3 cyclinder turbo for the Jazz. That would get me more excited than a bigger engine because, in the hybrid configuration, the motor would provide the low speed torque where the turbo doesn't help. Plus the smaller engine would warm up faster and stop pouring fuel down the exhaust pipe which is one of my grumbles about winter motoring.