I think N scale people come in various sizes. I bought a bag of a thousand or so a few years back from eBay at a very small price. They were more like 1:192 scale or even 1:220 scale than 1:160. So these are the figures I cut up for the interiors of cars (although sitting figures were a small percent), and interiors of cafes and bookstores. I think Daniel's correct about people in cars being magnified, although I posit a slight additional reason--it's the thickness of the glass, in addition to any lens effect. Which effect is larger is anybody's guess.
I like the smaller scale people for my ships!
The more expensive people are either true N Scale or even slightly larger, perhaps about 1:144.
I haven't bought the figures for a long while. I know some the the earlier WS figures were about 7' tall.