We have been hearing about this on and off for quite some while now, and even before the launch of the third generation iPad, that the 128GB capacity iPad and iPhones will be available soon, for the lack of any substantive proof.
However, things seem to be clearing out with the release of the iOS 6.1 Beta 5 that was sent out to developers. There seems to be a clear reference to a 128GB capacity device in the manifest. The screen-grab of the manifest suggests SystemPartitioningPadding key will also support 128GB storage, along with the existing examples of 8GB, 16GB, 32GB and 64GB.
Incidentally, hints of a 128GB device had also been dropped with iTunes 11, but no device has walked out of the door at Cupertino just yet, at least not that we know of.
It would make sense to have a 128GB iPad, both in the Wi-Fi only and the Wi-Fi 3G versions. The 64GB Wi-Fi version of the iPad currently retails for around Rs. 43,900, while the Wi-Fi 3G version costs Rs. 51,900. Do keep in mind that at Rs. 51,900, the 64GB iPad is Rs. 6,000 more than the 32GB version. It would be easier for Apple to absorb and justify the higher price with a hardware package that is bigger than the iPhone.
iOS 6.1 Beta 5 code hints at 128GB iOS devices