I got the 64GB 3G because I plan to use it to entertain the kids from time to time and will probably download a bunch of movies. They tend to take up alot of space so I just wanted to be on the safe side.
I'm kind of surprised at how many movies you can carry around with you if you're using the right software.
I recently decided to rip a few of my 3 year old son's Disney movies and turn them into .mp4 files so I could load them onto my 16gb iphone. I figured this would be a good way to keep him occupied while we're out to dinner or on long car rides.
I'm using Handbrake to create the mp4 files and they wind up being about 1-1.2gb on average. The quality is excellent (can't even tell the difference on my AppleTV).
At that file size per movie, you could probably get at least 11 or 12 movies on a 16gb iPad with a little room to spare. That's a pretty good library of movies to carry around with you.
Personally, I think 16GB is plenty big for most people.