Daring Fireball touched on this - apparently one reason that people didn't upgrade is because they didn't have enough spare space on their device to complete the install.
It's a major problem. iOS 8 demands something like 5GB of free space. The existing OS takes up maybe 4GB, so on your 16GB device, you can't upgrade if you're using more than 7GB or so. Not even half!
It's still possible to upgrade using a computer, but how many people even know you can do that anymore? The days of syncing with iTunes are long gone.
I know why they keep offering 16GB devices as the baseline (easy upsell), but it's got to be a lousy user experience for people who do buy them. Just installing iWork and GarageBand will eat up a huge chunk of that.
You'd think that by now the poor user experience would trump the extra profit. Apple's reputation is built on "it just works", and 16GB of storage is starting to fail that all by itself.
Can you use iTunes to load it onto your device if you don't have the extra space on your device (without deleting apps)? I know this is harder than just pressing update on the device itself. I remember before you had to update your device only using iTunes right?
http://support.apple.com/kb/TS4431