Some have stated that the 16 GB variant is still available at some brick-and-mortar stores, like Best Buy, so if you should probably look to head over to check it up. Additionally, an interesting theory I read these stores still have stock is that Google’s sending them pretty large shipments on their demands. The stores apparently have a very tight margin on the 8 GB version, and would much rather simply offer the 16 GB.
Honestly, though, I don’t think this is the end of the 16 GB from Google Play. How much ever they would want to maintain relationships with the stores, the entire purpose of the Nexus 7 was to promote Google Play. My guess is that the stores just overstocked expecting the rush, and/or Google sent them larger shipments to make sure the device is available while they solve chinks in their own deliveries.