If Google are serious about taking on Apple they really must up the storage capability of their devices, particularly given the fact they have dropped the microSD card option.
FWIW, I think the Nexus 7 is a great little device and like the idea of the rubberised back - it looks good and is not prone to scratching. Indeed, every one who buys a iPad or iPad mini is forced to purchase skins/covers if they wish to protect the brushed aluminium or paint surface from scratching - i.e., they have paid an arm and a leg for a mobile device and fear scratching it - this issue does not occur with the N7 based on price and material used for construction - obviously screen protectors are a must in my opinion.
Back to storage, it would be a no-brainer to purchase the N7 if it came with 64G storage - why buy a iTouch or iPad mini when you can have both a reasonable amount of storage - this being 64G in my mind - and a reasonably small form factor to take out and about - whilst I like the iTouch, its screen really is a little small and again cost is an issue.
In a nutshell, if Google offered a N7 with 64G storage and G3 connectivity I'd go out and purchase one over a iTouch and iPad.
One thing is for sure, whilst I'm a iPad 3 owner, one's annoyed that after only 4 months of ownership Apple upped the spec's in a move to take the wind out of the sails of both Google and MicroSoft - this means we have 100 million iPad devices that are now subpar, the iPad Mini is seriously flawed - we know it will be updated shortly to Retina and a A5X processor - and again the iTouch is now just too expensive - same price point and storage capability since the first one appeared in late 2007.
In a nutshell, Google have had a door opened for them by Apple's relentless thrust for extracting every dime it can from its existing user base - I've had enough of this and will be moving to android for my mobility needs be it a N7 or Asus Transformer series.