You can run out of space with 128GB too, but that's not the point. This is why people are pissed off about 16GB:
1) We've had it for 6 years now; Apple has never gone this long without bumping storage capacity in the past
2) The phones today eat a lot more data than when 16GB became base. In the 3GS days, we only had 3MP photos and 480p videos. Now with 4K videos and 12MP live photos, that 16GB doesn't go nearly as far.
3) It limits developers to an extent. They have to keep in mind that half their user base will have bought the cheap phone, in which case they have to sacrifice some assets in their apps