About Apple gouging people over the cost of flash -- isn't Apple a company that is interested in, well, profit? If they know we'll pay for one - then yeah, they're gonna get what they can. Simple Gnome Economics.
Step 1: Create Iphone
Step 2:
Step 3: Profit!
That said - I took the "hit" for 8G - as I anticipated updates and what not. I mean, I was dropping 500 for a phone, why chicken out at 4 Gigs?