Some people do. Lots of music, lots of videos. And lots of apps. It's not unusual for iOS apps to be larger than 2GB these days. Also, videos these days are taking up more storage due higher quality. Plus there's always the element of 'better safe than sorry'.
The iWork apps that come with the phone, if you choose to accept -- that's already 4GB or so before you've even started. 16GB is pathetic in 2014 and 32GB should be the absolute minimum. Plus it's not like it's costing Apple much -- component difference for Apple between 16-32GB isn't more than a couple of dollars.
There are loads of other reasons as well for 128GB that I can't think of off the top of my head; I'm sure another few MR members will help me out