That story blew chunks. When she wrote "low-end iPhone" and "high-end iPhone," I thought she meant features were going to be stripped and added. Then I realized she's probably some business writer who doesn't know crap about tech.
This is also another one of those "duh" analyst stories. iPhones have topped out at 16GB for almost 16 months now, and the iTunes Store has doubled the size of music files with the iTunes Plus move. Since Apple seems to boost iPod storage at least once a year, it's almost a no-brainer to claim this. This was about as out there as claiming that Apple would release a 3G iPhone in June last year.
Apple had better not decide to punk us and charge $399 for a 32GB iPhone. Apple already jacks people for the 16GB iPhone. Do you think it's even close to $100 more for the extra 8GB?