That certainly seems to be the case in the UK, which is where the image below comes from. This represents a shelf tag for the Nexus 7 32 GB, sent by a reader to Android and Me.
As you can see, the 32 GB version is pegged to cost £199.99. That’s exactly how much the 16 GB Nexus 7 is being sold for right now.
So this may support the ‘replacement’ theory. However, things are different in Spain. The Phone House, which is the Carphone Warehouse’s name outside the UK, is now letting you register your interest for the 32 GB tablet – if you’re in Spain.
On the registration page (which you can see above) the price for this upcoming tablet variation is listed as €279. That’s €30 more than what the 16 GB model costs in the big European markets. So this may indicate that the 16 GB and the 32 GB unit will co-exist on store shelves.
The plot thickens therefore. We’ll keep you posted.