Why would an iPhone 4S drops from 100% charge upon unplugging it? I have notice lately (in last two months or so) after disconnecting my iPhone 4s (with iOS 6) from the charger in the morning after an entire night of charger it immediately drops from 100% to 98%.  Is this a sign of a problem or normal battery aging.

I do perform the monthly battery drain til power down as recommended by Apple
It’s neither a problem nor a sign of ageing.

iOS devices, since the first iPhone, have used a method of charging their Li-ion batteries, which is different from normal charging as you know it. 

Suppose your device is at 10% charge and connected to the charger. The device will charge up to 80% in 2 hours. This is called fast charge. Now the device will charge up to 100% in another 2 hours. This is called slow charge.

When the device reaches 95% actual charge, it displays “100%” as the current charge in the status bar. The device keeps charging till it reaches 100% actual charge, at which point charging is stopped and the battery discharges naturally. Note that still the displayed charge is “100%.” Now, when the battery reaches 95% while discharging, charging starts again and continues till you reach 100%.

This cycle is repeated until you disconnect the charger, at which point the displayed charge changes from “100%” to the actual charge, which may be anywhere between 95%-99%.