I think it'd be silly for them to phase out the 16GB... wouldn't it make more sense to just phase out the 8GB?
lol I think 16GB users would feel less 'cheated' to have theirs removed entirely, rather than have it drop $50 just a month or two after purchase

. as a 16GB owner, that's just how I feel.
also.. the disparity between an 8GB and a 32GB would better increase sales for the 32GB, compared to 16GB vs 32GB. If for $200 you got 16GB, I think many people would feel content
not spending $50 for an extra 16GB they might not use--not that people wouldn't buy the 32GB in that scenario, but less so than if given the choice between 8GB and 32GB.
A. Remove 16GB model, just have 8GB/32GB: I mean, they'd want people to spend that extra $50, right? The $200 8GB would be for casual users who don't feel like committing too much $$, and for everyone else there's the 32GB.
B. Remove 8GB, replace with $200 16GB: becomes more competitive with the Kindle Fire 2.0.
So it really depends on what they're going for here.