My my, such anger and indignation!!!
But you seem to speak from both sides of your mouth because Amazon's Kindle Fire which you tout "witht its tons of conents" [sic] only has 8GB of storage.
Jobs was the spiritual leader at Apple, but he wasn't the only guy present at the start of the iOS revolution. Apple has one of the finest management teams in the world. The 16/32/64 storage models will sell just fine. The only storm that will be present is the one futher blowing Android tabs closer to the margins' ultimate edge (Samsung admits sales are poor).
The reality is the man and woman on the street don't clutter up their devices with apps they never use or songs or movies they never listen to or watch. Some apps will expand in size b/c of Retina, sure, but we've been here before with the iPhone 4. It's not that significant if you manage your iOS device and developers code efficiently.
Sure 128GB would be great for the 64GB price but obviously Apple couldn't swing that deal w/ suppliers and isn't going add another model (too many already) or jack up the price to the point a iPad costs as much as an Air.