It'll have 16gb of flash. 12 will be user accessable.
Honestly. It's too costly to include hdds with a console. If the user wants one, they can add an external drive, much like the wii-u.
The prices of hdds do disgust me atm, and I'm sure Sony aren't best pleased either. That flood was a long time ago now.
But yeah, a smaller PS3 would be smart. I'd probably even buy one if it came in at the right price, and kept my other running cfw. I have my mancave here, and a wee ps3 might go nicely.