Why would apple want to keep on coming out with large capacity devices when they are spending tons of money developing and marketing iCloud and iTunes Match? They are trying to get people to understand they no longer need to store all their music and files on their device, since it can be stored in the cloud.
they just updated their storage options. you can get 20gb for .99 per month. you can get 200gb for just $3.99 per month.
so why not just buy a 16gb device and store everything in the cloud?
Because I don't wish to use the cloud for storing my music; I'm old school - I still buy CDs, play them and rip them to my iTunes on my computer. (I have thousands and thousands of CDs). Indeed, I still buy - and read (and occasionally, write) books, real books, that is. (And yes, I have thousands and thousands of books - in fact, I am quite convinced that my books breed when my back is turned).
And I like the idea of being able to physically transport my entire music library in one nice little portable device. Yes, we 'understand that you no longer need to store music and files on our devices' but we still want to be able to do so.
It is not just a repudiation of a more modern - doubtless technologically efficient - way of storing data, from my perspective, I must say that there are also issues of trust and questions about ownership of that data. This is also why my MBA has a SSD drive with 512GB, and - the happy day when that capacity increases - and I need to upgrade - I shall happily do so ...