That logic doesn't isn't really iron clad since people could also be buying the 16GB because it is the cheapest version of the shiny new iPhone they want. If you want to use iOS, you're either paying for the base 16GG or paying a lot of money for the higher storage tier, there isn't a cheaper option.
The problem is most consumers don't realize what they're getting themselves into. Apple will make a profit on those who upgrade knowing better, but many won't.
When grandma needs to learn how to manage storage, this is going to make everybody's life harder, from people who do tech support to application developers who need to rethink how they use application storage space.
Literally, the only player who benefits here is Apple. And even that is disputable due to the problems it will cause to iPhone app developers who now need to be extremely cautious about storage use.