It's all about timing. Apple still wants to sell as many 8GB iPhones as possible before unveiling as 16GB version. Otherwise the 8GB iPhone will suffer the fate of the 4GB version.
It's not as much about what the people want, it's about what the people want and then only giving it to them when it's most profitable. That's business.
It's funny to see how Apple prices memory differences. For example, with the iPhone the only difference between the two was 4GB of flash memory. For that, you paid $100 more. But now we see that they are only charging $50 more for that same memory boost in the iPod Nano. Interesting, huh? I guess we can see why Apple decided to ditch the 4GB iPhone: 1. it's wasn't selling as well and 2. the 8GB is much more profitable, even considering the price drops, which still have a $100 difference.