I find 16gb quite limiting for me, hopefully iOS 8 helps me out with iCloud photos, but till then I've got to live with a 16gb 4S. What about you?
I have well over 15GB of music up in Google Play. None of it on my iPhone. I just stream it using the Google Play app.I'm fine with 16GB. I don't really see a need to keep a huge amount of content on my phone. My over 500 songs take up 3.4GB. My 600 photos take up just 1.3GB. My largest apps are all less than 1GB. No reason to keep or watch movies or TV shows on my phone when I have tablet, a laptop, and a desktop all with larger displays.
If I need more space later I can get rid of most of those photos and probably half of those songs that I hardly listen to (all backed up on my PC and the cloud, of course). Also, between Dropbox, Onedrive, and Google Drive I have something like 30GB of free cloud storage. I'm not the type that needs to carry all my content in my pocket all the time.
A 16GB iphone is good for someone who doesn't want to take a lot of photos or listen to a lot of music.