I'm trying to figure out who the people are complaining about this... The only thing I can figure is that it's kids upset because they have to take the device their parents are buying for them.
The argument "there shouldn't be a 16GB iPhone" is a strange one. I understand the "there should be a 256GB iPhone" argument: the desire for something that doesn't exist. Saying that something shouldn't be an option seems like a strange thing to spend so much vitriol on.
There are higher capacity devices available, so if 16GB is simply not usable for someone you'd think they'd buy a device that was unless they aren't the one making the decision. So the reason the problem is being phrased as "16GB isn't enough at the bottom end" rather than "the 64GB is too expensive" is because they know their parents will always buy the bottom end-- so making everything cheaper doesn't help them.
No, they made the base model 16 gigs so they can up sell people to more profitable phones. Basic marketing;
There is definitely some truth to the fact that it helps to have a range of products. Very few people do careful analysis of cost/value when making a purchase decision. If you give people three choices, most people pick the one in the middle because most people consider themselves "typical". You can then charge higher margins for the top end one (think Apple Watch Edition) because there are a few people with lots of money who think their needs exceed those of everyone else in every way, and offer a bottom end device at lower margins to capture customers you wouldn't be able to address at your average profit margin.
Up selling works when the incremental cost among tiers is small, so people are easily persuaded to buy more than they need. The up-sell argument is an odd one though in this context. People are saying that 16GB isn't usable, and that they need more storage-- so they are buying what they need, not more than they need.
And how does the 8GB 5C fit into this argument? Is it there just to upsell people to a 16GB? If that were true, then people would have to admit that 16GB was usable. Maybe it's an even more elaborate plot to double-upsell people to the 64GB? Cunning, that.
Or maybe it's just a way to address the most cost sensitive parts of the market-- people who want an iPhone, but for whom cost is more critical than having all three versions of Infinity Blade installed.
Why 16GB, simple, Greed! Well that's what business do as we all know. But if Apple wants to keep customers happy, which businesses should want to do, they need to bump the minimum to 32GB. If you have 1000 pictures and 20 videos on your phone your going to eat up a lot of that 16GB, not to mention the OS taking up 1/3 of that, so really you only have about 10 GB of useable storage when you open the box. Then download a couple big apps/games that are 500-1000 MB and your out of space. The cloud ain't gonna help you there buddy. Time to step up, its 2015 already, add another 16GB of ram, whats it cost you 5 bucks! So make the low end model $5 dollars more and you will make everyone happy.
You do realize that you are making the argument that the 16GB version is tremendous deal, right? The only difference between the different tiers of iPhone is the storage so if another 16GB of Flash is $5, then the 16GB device costs apple $15 less to make than the 64GB, but they're selling it for $100 less-- you're getting an $85 discount!
Maybe it's a bit less of a discount than that, but Apple set up their pricing so that they hit a target profit margin across the product mix-- so if this really is all ruse to get people to buy the 64GB, then that device is probably closest to their target margin and the 16 is a steal.
