In the MWC event, they've promised a "flagship tier phone" once Windows 10 for Phone is out. So, SOON™

The 640 XL is technically supposed to be the successor to the Lumia 1320. Reason for discontinuing the L13xx model number is probably to clear out some confusion (L9xx series is the flagship but there's a higher number series with lower specs???)

Difference is small :
- XL got better camera (FFC : 1MP vs 5MP, Rear : 8MP vs 13MP).
- XL got bigger battery (3000mAh vs 2500mAh)

Based on the official site, the L735's front camera can do 1080p while the L535's front camera can only do FWVGA (848 x 480).

- Microsoft Lumia 535 Specification
- Nokia Lumia 735 Specification