I dont think Apple will ever make a device have less than 16 GB again. I could be completely wrong, but I dont see it. Partly because there just isnt enough space to store almost anything on an 8 GB anything, after the OS is loaded and your left with around 5 GB to actually use. And I also dont see iClound being the kind of service to help alleviate that.
For that reason, I dont see the iPad mini hitting the $199 mark. It think it might be $250 for 16 GB, which would put the same as the Nexus 7 for the same storage. If it does manage to be $199, it will be with 16 GB, which will basically kill the Nexus 7 which has half of that for the same price. To hit that, I think they would save money off other things, like a camera, and non retina screen, rather than limit storage, because that just hurts the entire experience when you buy an iPad, download 5 apps and realize you have run out of space.