The criticism of a SOC that includes RAM and logic on one (much faster) chip is the 2021 version of the "an iMac doesn't have a floppy drive, parallel ports, or PS2 ports" complaints of 1997.
The iMac M1 systems are both significantly cheaper than competing PCs with similar specs and have speeds that no comparable Intel or AMD powered system can match. I think the average person will be fine with that compromise, just as they were fine with Apple's decision to ditch other Wintel legacies like the floppy drive in years past.
You can see this trend in the mobile space as well -- Samsung and others who used to hail "removable batteries" and other legacy concepts like SD cards have since come around to removing those from their phones to remain competitive. Within the next couple of years, SOC systems from Intel and AMD are inevitable, they won't have upgradeable RAM either, and nobody will care.
While that might be true for Windows PCs due to the bloated nature of that OS, it's not accurate for Macs. I have a 1 TB drive on my Intel MacBook, and about half is devoted to a Windows partition. That OS gobbles up storage like no tomorrow; whereas OS X is quite a bit less hungry.
Just checked my MacBook Pro's storage. The OS uses not quite 19 GB. A clean install of Big Sur would leave about 220 GB of free space, which is plenty for the sort of user who purchases an entry-level $1,299 Mac.
Mac users also tend to heavily leverage the cloud due to the integration of advanced cloud storage options into the OS; that tends to keep the usage and storage space down.
I'd like to meet the person who can easily fill up 100+ GB with "personal files." That's likely to primarily be someone editing large amounts of video, and that sort of user is probably going to have a NAT for additional storage.