Pretty sure it's the 8GB that will bite the dust. I think some are saying it's low-stock/prepared for clearance in Staples?
If they bring the 16GB to $200, they'd make the N7 more competitive with other devices on the market (iPad mini, Kindle Fire). However, this'll probably detract sales from the 32GB. If they keep the 8GB at $200 and toss out the 16GB, it'd boost sales for the 32GB--but at the same time, it might be less competitive with other devices.