That doesn't make sense to me at all. Sure, pick a larger part, pay more money, and don't squeeze your code. It's a decision to be made, but don't label the decision for a smaller part as "wrong" until you know the trade-offs being made.

When you talk about huge volumes, that cent or two for the part can make a significant difference. Really, it can. I've been there. I've been part of a team that commissioned silicon and had to contribute to the decision about how much programming space to have. Compromises like this can make a very large difference to the economics.