does the protruding ring mean the rest of the device is going to be thinner?
Apparently, yes. Apparently, "thin" trumped "flush", meaning since the camera part could not be made as thin as all of the rest of the phone, it will need to stick out. Too many people griping about the thickness of the iPhone 5s (none of which I've ever heard or seen myself) to not address that paramount problem even if it means one part of the phone would need to protrude.
I think Apple is caught in a design loop where the very first target for the next generation of anything is "thinner". There is no "thin enough" rationalization. When "thinner" collides with physical limits of hardware it's either protrude or eject that hardware, not reconsider the "thinning" objective.
On iPhone, I think the 4 was plenty thin enough and 5s is borderline too thin (IMO). But there are those who will passionately argue for "thinner" (I suspect because they know Apple is going there more than they actually want it; after all, I never see them write a gripe down that their 5s is too thick
it's almost always some spin about progress, design innovation and so on).