Most of you are forgetting one thing; you're on a tech forum. Most people are going to be totally out of whack with what people use because you think everyone is just like you and for the most part, the people who are on this site use their devices the same way. But the vast majority of people who are buying a 5c, aren't using it like you and I. They're using it for internet, e-mail, phone calls, texting, a couple of apps here and there, and that's it. Things that don't take up space.
The way you have to think about is with your parents/grand-parents who still have a feature phone. If these users were to switch over for free (if this rumor is true) to an 8gb 5c, what would they do on it? Odds are, not much of anything that takes up space. There's a lot you can do on an iPhone without taking up space. An 8gb phone, yes, it's what came on iPhone's circa 2007-2009, but still, if you're not using a space, you can still get [for the most part] today's technology and experience with no up front cost. I know both of my parents, if you took away the pictures they take of their grandchildren, would only have maybe 2-3gb's used on their phones. They both have 16gb phones. Which means, they both paid for their phones. The 5c isn't targeted at people like you and me who sit on their computers at 11am (EST) on a Monday reading/posting to a tech forum. It's targeted at first time smart phones buyers, kids whose parents are looking to get them a smart phone that doesn't cost $700, markets like China and India, etc. You're right, 8gb doesn't work for you and it doesn't work for me either. But it does work for millions of users who want/need a smartphone and can't afford double the off contract price of a hypothetical 8gb 5c.
If Apple does come out with an 8gb 5c, obviously, it'll be less off-contract than the 16gb 5c at $549. The 8gb 4s is currently $450 off contract and if they were to drop the price of all 5c's because, let's be realistic, no one is paying full price for a 5c anyway, then they'd be looking at a $350-$400 8gb 5c. Keep in mind, Apple is paying for, whether they sell them or not, 3 concurrent production lines to be running; 5s, 5c, and 4s. That's a lot of up keep and unnecessary expense if they're not selling the 4s too often. By releasing a cheaper, small (capacity) 5c, they cut their production lines down to 2; 5s and 5c. Which means, their GM on the iPhone business line goes up. It's a scenario where selling more phones for less money actually does make them more in the long run.
