[bradfa]

Differentiation, physical NAND chip size, and margins.

If the base model is 16 GB, then you have the ability to sell 2 higher spec models which have more capacity and to price them substantially higher netting larger margins (but likely lower sales volumes). If the base model was 64 GB, it would be difficult for Apple to have 2 higher spec models without impacting their phone's physical size as 512 Gb (64 GB) NAND is generally the largest available single chip size, today, so packing more than 64 GB into a constrained space inside a phone is hard.

The margins come from pricing what is likely a $5-$20 cost step as $100 price steps. Obviously more people are going to buy the less expensive phone so you make lots of profit but at lower margin, but you create a market where the lower sales volumes (larger storage capacity phones) have higher margin and net reasonable profits enough to justify having the larger storage capacity versions as carrying additional part numbers for sales is not 0 cost.