--> headslap! <--
No, it shouldn't. It should describe the hardware capabilities. If you buy a Mac, the disk size isn't specified as "disk size minus operating system and minus free apps". Just because iOS devices are crippled (no root access) and use solid state storage doesn't mean that capacity should be reported any differently than in any other computing device being sold.
I'm actually really surprise any manufacturer still offers a 16GB version, especially Apple since they don't offer any other means of adding more memory later like a Mini SD. Which by the way absolutely drives me batty. It's gotten better now with cloud storage and the app, "Air Sharing" but coping large amounts of data between two machines that aren't connected to a network is still a pain without a Mini SD, example a friends computer. Apples choice to not include one still alludes me but I'm sure it's about forcing the consumer to pay extra for the higher capacity models. People on this board can rationalize that decision all they want, the truth is it's all about greed, the popularity of Apple products have put the company in a position that they can get away with charging more. Memory for tablets is also probably the highest margin item in the computer business. How much does Apple pay for 128GB, 30, maybe 40 dollars. 64Gb and 128GB should be the only two options but that will never happen. This is just one of reasons why I really dislike all of the Apple worshiping that goes on here. The company like every other multi-billion dollar corporation are ripping you off, the almost 3 year old iPad 2 is still being sold for 400 dollars, amazing, a sucker really is born every minute. I apologize if my post bothers some of you but the closer I get to death the more I just don't care about material things. I'm also a little bat shitt crazy right now as I have a morphine pump and this stuff is kind of a truth serum.