Photography is only a hobby for me. ... This is why, many years ago, I sold my Panasonic Lumix LX5 and been using my iPhone 5c ...
You got rid of your camera in favor of using the iPhone. Most likely, you were just not using your camera. Rather than let it collect dust and grow mold in a dark corner somewhere, you sent it off to a new home. No problem with that.
what if I get a budget smartphone + and ereader + a 300$ camera for point and shoot.
If you were to buy a (non-phone) camera, would you use it? Or would it share the same fate as your Panasonic Lumix LX5? Would you really carry around three separate devices (phone, ereader, camera) where you now carry only one?
As far as getting a "budget" phone running Android, iPhone users are rarely happy switching to Android. Save yourself unnecessary pain, and stick with an iPhone.
any camera should still beat the most expensive flagship phone due to better sensors and lenses, but wonder if their auto mode beats the smartphones' as well?
There are still a wide range of cameras. Low to mid-range cameras tend to do worse than the best smartphone cameras. The cameras and processing of iPhones tend to be pretty good, which is why many people appear to be abandoning compact cameras, as you yourself can attest.
Photo quality is also a product of the photographers experience and knowledge. When you use a (non-phone) camera, your brain becomes the processor that must perform many of the tasks the phone had been doing for you. I can hand anyone an iPhone, and as long as they point it in the right direction, they will take better photos with it than I can. But if I hand them my camera, unless they know what they're doing (or I put the settings in for them), pictures have a good chance of coming out mediocre.
Auto mode on "good" cameras is often lackluster compared with that of the most advanced smartphones. A feature that tends to be prized by "photographers" is the ability to function as if it were one of its most primitive predecessors ("manual mode"). If that isn't what you want, a (non-phone) camera may not be for you.
Why are you really dissatisfied with the pictures you are getting from your iPhone 5? Have finally been bitten by the photography bug? Or are the photos simply lacking in comparison to an iPhone 6/7/8/X?
I haven't written anywhere that I am dissatisfied with the pictures from the 5c, on the contrary. But, the phone is almost 5 years now shows various lags and bugs from time to time. During the last time, in which the technician barely managed to bring it back to life, I started to wonder what should I do, if I have to buy a new one. – Riddle-Master
Since you are satisfied by the photos coming from your phone, why bother changing anything? Should your phone fail, you can replace it with the same model or one of its successors. The process of moving files and settings to a new iPhone is fairly straightforward. Apple store employees will gladly assist you when you purchase the new device.