I'd have to assume the margins are higher on the higher capacity models. There's just no way 16gb of memory costs apple anywhere near the $100 more they charge for the 32 GB model over the 16. As illustrated by the 64 GB only costing $100 more than the 32 despite being twice the jump in capacity.
I'm sure that wanting to rake in $$$ isn't the only reason for not allowing such things, or SD cards or USB hard drives etc.--as part of it is the closed system, inaccessible file system etc. But it's definitely part of it. I'm not bashing them for it, plenty of other companies have devices (MP3 players) etc. that don't have SD card slots etc.
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