16gb at $18.71 US dollars, times 8 = $149.68 for 128gb. Yes, it's SD, but proves that 128gb flash memory can be had for an affordable price, and surely cheaper if you're Apple buying huge quantities.
The 8gb Touch = $299, and 16g Touch = $399 at the moment. Just assume a 0gb Touch would be $199 and still have profit in it. Add $150 for the 128gb RAM to get to $349. Add another $50 profit for Apple to be at $399 for a $128gb iPod Touch.
Flash Memory has dropped in price considerably, and
will continue to drop. That has been true since they first invented it. I'm not sure why anyone needs 128gb, as they only put 64gb in the MacBook Air. I'll predict a 64GB Touch for less than $400 though, and Apple won't be losing money on it.
4D