While the Iris iGPUs aren't as bad as people sometimes seem to think, they're also not nearly as good as they could be when comparing them to the competition. Also, there hasn't been any progress on Intels iGPUs since the first Iris Pro in 2014 - that's four years when the next MacBook Pro generation launches. I don't know about you, but I expect a notebook I buy in 2018 to have more GPU power than the one I bought in 2014.
Apple indeed does use the highest end graphics they can in their notebooks (as long as increasing the TDP or using a slower CPU is not an option). The Iris Plus 640 / 650 are indeed the fastest iGPUs Intel is offering in the 15W / 28W CPU classes, respectively.
A faster CPU does improve the performance of the iGPU, but not by much. At least not by nearly enough to compete against AMDs new offerings.
So, what are the options for the smaller MBP? Using the same Iris Plus 650? Hoping for a slightly improved version of that iGPU? I hope Apple, Intel and AMD sit together and do something seriously cool, otherwise, the update will be quite lackluster on the GPU front.