Avg. rent in Berlin is €1000, Avg. Lunch 8€, Beer 0.80€, Internet €23 ... more info here: http://bondero.com/startup-cost-comparison
As single developer you wouldn't need 85qm, true. As a couple you probably want to have min. 50-60qm. My personal taste obviously, but I have a family with two kids and we need more than that :)
It's still pretty easy to find a 50qm in Friedrichshain, Kreuzberg, or Neukölln (within the Ringbahn) for under €500-600 warm. If you want or need a larger, fancier flat, or if you want to live in Prenzlberg or Charlottenburg, obviously you can choose to pay more.
If you look into (relatively well connected parts of) e.g. Moabit or Wedding you'll find prices more agreeable.
UPD: well, for a large flat in the city centre that's a fair price, but that's not average for Berlin.