As studies have shown, too much choice is actually bad for the consumer. And Apple are often muddying the waters by keeping certain older models of products, but not having them in as high a capacity as newer hardware any more. All these various permutations make the decision process more complex. Perhaps Apple do so intentionally, so that people just decide to go for the latest and greatest and thus buy the most expensive even if they don't need to.
Clearly, neither extreme is desirable, but how many is too many? There are currently only 4 iPad models, hardly enough to constitute a bloated and confusing lineup, considering the larger market that Apple serves today.