In an image which is claimed to be an iPhone 7, shows that the new iPhone will have a touch-sensitive home button (via mobipicker.com). Aside from the image being super blurry, it shows a new detail in an otherwise similar design from its predecessor.
From what we can gather, it appears as though the home button is flat and aligned with the bezel, which means Apple will be dropping the click and make a capacitive home button.
In order to replace the physical click, however, Apple could possibly integrate the same Force Touch technology found in the MacBook to sense different levels of force. Another option would be for Apple to simply use taps versus actually clicking on the sensor.
Making such a transition would be logical for Apple. One less physical button equals one less part that’s prone for failure.