16 GB
There’s no doubt in my mind it’s good short-term business sense to go with a 16/64/128 lineup instead of 32/64/128. But Apple is not a short-term business. They’re a long-term business, built on a relationship of trust with repeat customers. 16 GB iPads work against the foundation of Apple’s brand, which is that they only make good products.
Apple has long used three-tier pricing structures within individual product categories. They often used to label them “Good”, “Better”, and “Best”. Now, with these 16 GB entry-level devices, it’s more like “Are you sure?”, “Better”, and “Best”. Fine, keep the 16 GB models around for expert business and education buyers who know that they really don’t need more storage space. But don’t put devices on the tables in Apple retail stores that you wouldn’t recommend as a good product and good value to typical customers.