If there were market demand, Apple would do it. Despite outward appearances, they do significant market research (and you should see some of their internal social media analysis tools). But there isn't (at this time) so they didn't. The cloud is in.
Am I the only one who still finds it hilarious that people still fork out a grand for a phone without a micro extension slot then turns around and complains about storage and the price of an upgrade.
Apple is starting to care too much about profit, to the point where they have to make a plastic body for the iPhone 5 just to maintain a higher profit margin, when they make it $100 cheaper a year later (as they usually do).