Indeed not - with the 4S they added unlimited storage at the same price, and retrospectively added it to any device running iOS 5, with 5GB for some uses.
It may not be flash memory, but it has to count - it is what Apple intend to be used for bulk music storage with iOS 5.
iPhone 3GS: 16GB for $199, 32GB for $299.
iPhone 4: 16GB for $199, 32GB for $299.
iPhone 4S: 16GB for $199, 32GB for $299, 64GB for $399.