Macintosh 128K: Technical Specifications
support.apple.com
support.apple.com
The Mac Plus (released in January 1986) did have support in System 7 up to 7.5 in 1996.
The 128k Mac was cool, but the RAM constraints in particular made upgrades to the 512k in 1985 and the Plus (upgraded ROM and 1024kb) in 1986 a no-brainer.
edit: looks like the 128K system info page is wrong, you needed a Plus for System 6 http://support.apple.com/kb/TA33972?viewlocale=en_US
not bad.
If you spread out that increase over the course of 30 years, you are adding 10.5% more pixels each year, while cutting the price by ~60% (from Macintosh to present iMac)
It's been a crazy 30 years!