I think it's more (and it's not just Apple playing this game) that the entry model/price is horrifically under-powered. It's there to hook you in on the price, and that's it. The rest of the pricing is then designed to pull you along the upgrade ratchet.

i.e. You've paid the absolutely necessary $249 to get the 512Gb... then it's only $200 to get an extra 512Gb. Once you've overcome that first hurdle, the 2nd looks almost good value.