Most people seem to be upset at having to "waste" $50 bucks due to the lack of a 64 GB model.
Google could've done $769, $819=64 GB, and $869=128 GB. I'm thinking they did it for simplicity, to limit the number of product skus and could've also thought that a 64 GB model was unnecessary and would sell poorly.
I'm not saying I agree with this, but the 32 GB version will always be popular with people that want a lower cost device and don't need a lot of storage.
The 128 GB version will be popular for those "power users" that want a lot of storage.
I'm not independently wealthy and may be off base, but if the 64 GB version and 128 GB version amounted to a difference of only $50, I could see a lot of people that would pay the extra $50, knowing that their storage needs are covered, while the 32 GB version also sold well, due to it's lower cost.
Of course, it would've been nice if Google made 64 GB the base standard to begin with, but that's another thread. Personally, I don't mind paying an extra $100 for 4 times the storage. Last year, the Nexus 6P was $499 for 32 GB, $549 for 64 GB, and $649 for $128. I could've managed with 64 GB and thought much harder if it was worth paying an extra $100 to jump from 64 GB to 128, but I've been happy with my decision.
I like to travel with my phone and always like knowing that I can access videos, movies, and music without needing a data connection. I also like to use my phone as a portable flash drive at times, storing documents, zip files, backup drivers for my laptop etc that can be easily accessed on the go. Personally, I've always been partial to internal storage vs. SD cards as well, since I've never, knock on wood, had internal storage fail.
Internal storage is cheap, and I'm sure most of that $100 is profit, but I am happy it's only a $100 difference this time. When I was buying an Iphone as a gift for a family member, Apple had the 16 GB version as the base, 64 GB was an extra $100, and 128 GB was another $100.
In that case, it was much easier for me to justify getting the 64 GB model and saving $100, since I knew 64 would be plenty for them. However, if Apple had priced each at only a $50 difference, I may have actually gifted them the 128 GB model.
Lastly, and I have no way to prove this, but assuming the 128 GB version adds an extra $25 or $50 to the phone's resale value after one year, it would make it much easier for me to recommend the 128 GB version.