8GB is plenty because it's only needed as a local buffer. Amazon has leveraged their massive cloud computing structure to allow Kindle Fire's new Silk web browser to optimize the retrieval and presentation of web pages. This is the same infrastructure that many high-tech start-ups use for their systems.
Competitors other than Google, Apple, and IBM will be hard-pressed to emulate this approach as the infrastructure costs and programming complexity is high. The benefit to the user are speed increases beyond what's possible with traditional browsers on wireless connections.
Old way: You buy as much memory as you can afford when you buy a device. Then you buy SD cards for overflow. You juggle your music and video collections back and forth depending on what you want to listen to or watch because it still doesn't all fit.
New Kindle Fire way: Software manages it for you over the network so that you always have access to all of your content, and Amazon pays for unlimited cloud storage of digital content bought from them.
If this is implemented right, and we'll see when Kindle Fires first start arriving after their Nov 15 release date, it's a serious advance. If you're skeptical, wait until after others start reporting results, but Amazon's success in the ereader space coupled with their success in cloud computing gives strong reason to be hopeful that they will have nailed this new advance.