Who's upset? I said I was disappointed that they aren't putting out a 32 GB for the $199 price point. How could you possibly be lost?
They dropped the 8GB option when the 4S came out. It would have made some sense to move on with 32 GB as a starting point and drop the 16.
It would have made sense to YOU. As far as everyone else can tell, it made more sense for Apple to offer a cheaper entry level storage option of 16GB for those who still wanted the cheaper cost device AND for those who rely primarily on iCloud storage for their storage needs...then offer the midrange at 64GB at the same pricing point as the previous mid range pricing (32GB).
People need to understand that Apple kills two birds with one stone by keeping with the 16GB model as the entry point...they make more profit off of this vs. a 32GB option, and they continue to satisfy the entry level consumer as well as the iCloud based consumer.