Why does the iphone say it has 16 gb but when i plug it in it shows 26.2 gb with only a capacity of 13.4gb?

ok guys i have done my fair share of reading and i am so lost. on my box it says i have a 16 gig iphone 4 verizon white. my question is everytime i plug my phone in it pops up with a little tiny AutoRun icon and i hit open files. well it shows that i have 13.4gb of 26.2gb. but in iTunes it only shows my phone with 13.4 with 12 available for apps and music. why is it that my phone realy has 26 gigs and i can only access half of that?
Is my phone realy using 13gb just for software? that is way to much for me. any body else see this, what about any fixs or what not?

There's no way a 16GB model phone has more than than capacity.  I have no idea what you mean by AutoRun icon.  Is that an app you downloaded?  Did you jailbreak?
The "advertised" capacity of all storage devices is based on a decimal definition of "Gigabytes" where 1 GB is defined as 1,000,000,000 bytes.  However computers see and calculate storage based on binary definitions where 1 GB = 1,073 742,824 bytes.  Thus a 16 GB "decimal" device is only 14.9 real, binary gigabytes.
Also, there are additional loses due to formatting overhead and the iOS.  RAM memory is separate and not used from the supplied flash disk.

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