I think this has been done deliberately to lower the perceived entry price and attract interest, but then drive consumers towards the "only slightly" higher priced but "poor selling" 16gb model. Same reason people go for the 5S because it's not that much more than the 5C.
Still a very uncompetitive phone whichever way you look at it. Glad I bought another fruit phone for less than half the price, 6 times the memory capacity and better suited to my communication, media and AV requirements.