Why do folks keep referring to the space as 8 and 16gb? The actual space after netting out the OS allocation, stock apps, format parameters and OS operational floor is about 5.1gb and 13gb. That space is actual user space.
Light users or cloud fans will have no problems, but others will, so depends on the user and their own preferences.
Just a few movies, songs and games apps will eat the smaller space up, so gamers and media fans will REALLY notice the issue. Assuming a person's own relatively light use (or cloud 'centricness') should not be an assumed standard for all. Then again, the N7 is not the best device for gamers and media nuts. The N7's bigger and more capable bother would be: The TF300. and IMO, worth the extra money, if you ARE a game or media nut and despise cloud storage.