@dugbug But higher capacities also require a higher amount of iCloud storage for backups (not if you are filling the additional 60 gigs with iTunes in the Cloud-media, but if you are filling it with apps).
Too bad that they don't give out more free iCloud storage with new devices, with an iPad 4, iPad Mini and iPhone 5 (not my devices, but there will be people who have all of these devices) you will run out of storage for backups easily, would be cool it you got 5gigs per device (or 5gigs for the first device and 3 additional gigabytes per additional device).
But now back to this rumor:
What about an increase in the base capacity of all devices?
All iPhone 5S starting with 32GB and all iPhone 5 and 4S (and maybe they will still sell the iPhone 4) starting with 16GB).
Pros:
In the past, a unique selling point of the iPhone was its higher base capacity than any Android device, those had only 512 MB or perhaps 8 GB of storage capacity, requiring SD cards for additional storage (creating the App2SD-problem, not all apps could be moved to the SD card).
Android devices have increased their storage capacities to iPhone levels or beyond, their base capacity often higher than the base iPhone capacity and their maximum capacity (including SD card) even higher than the iPhone.
Also, 8GB are not enough for a future cheaper iPhone 5, they have to increase the capacity of their cheaper devices at some point in the future and i think the iPhone 5 could be the right moment.
Nobody wants to imagine an iPhone 6S with 8GB storage capacity, 4K-resolution video recording feature AND 8GB RAM^^
Cons: Higher manufacturing cost of all devices (but only slightly higher, most likely not enough to offset the benefit a higher capacity adds)
Maybe a higher base capacity discourages people from paying for devices with higher capacity, especially with the cheaper models this could lead to some people chosing a future cheaper iPhone 5 with 16GB over a 32GB iPhone 5S, while he would have taken the 5S if the iPhone 5 were only available with 8GB.