Though 320 is the smallest. With screen sizes increasing should we design for 360 as the new default rather than 320?
really depends on your users and use cases. I havent designed for 320 in about 2 years. Not because we don't have 320px phone users, but because the number is so small and because android is pretty good about resizing.
Now, if your target audience is outside of the US and using more dated or lowend phones, then its something you might want to continue doing.
Depends on your target group. Do you have numbers? Other User relevant Data, Research? Do the math first before designing.