Using the cloud requires data and I have a 64gb iPhone 5 and only have 6gb of space available. Some people have more media than others...
When I say I use iTunes in the cloud, it means I delete apps when I don't need them, knowing they will be in the cloud for me to download at home when I want them. I don't need to keep all my movies on my phone because I can really only watch one on any given day, without getting distracted. I don't have iTunes Match, and I don't download over data. For someone with 1000+ songs, they might need some more space, but at that point they really should look into an iPod classic, and keeping their songs on there, with their favorites also on their iPhone. I'm just saying that apple is not likely to release a 128gb iPhone. Maybe in ipad, maybe an iPod, but iPhones are expensive enough as is, and they will not want to produce a phone that is not going to sell many units. I also believe we will be looking at a $600 subsidized, $1050 unsubsidized price tag.