Just found out now, the Wii U is to contain flash storage, and to support usb harddrives/flash drives and SD cards.

This sounds like the best of all worlds. Inbuilt flash drive means that we get fast load times of things on the drive, less power consumption and heat produced, longer console lifetime.

Support for all major 3rd party storage formats means that we can have lots of storage for cheap (free for 99% of the population)

Source is a reddit post that uses the E3 briefing (with no hyperlink) as its source http://www.reddit.com/r/gaming/comments/htwfy/new_nintendo_console_wii_u_fact_sheet/

Sweet... the 1TB external hard drive I have collecting dust for the past 6 months will get some usage......er....in 12 months.

Now that is a big win.

In fact that's fuckin genius.

this is good to hear, I just hope it's an acceptable amount of flash

3DS is 2gb.

Murphy's law for flash memory is about 12 months to double capacity. Wii U should be released 12-15 months after 3ds, so  that doubles it to 4gb.

Then the fact that it is a home console means that more storage will be practical and useful, which would probably multiply it by a factor of 4 or so.

I reckon 16gb is about right - although 8 is possible if they are planning to eventually release new SKU's with more storage and 32 is possible if they want it to be a bit more future proof.

What would you deem to be acceptable?

that is actually a very good idea. Instead of just making new SKUs with bigger hard drives Nintendo can just release one SKU and have the consumer upgrade with their own hard drives