I worked with my 16GB iPad 1 for over two years. It was tight at times, I had a playlist in iTunes with 2GB of music I had created for my iPod Nano which worked well enough, and I also compressed shows I wanted to carry down to 320x240 resolution. I bought Air Video for the iPad and that let me stream movies from my server to it anywhere in the world with a network connection and it had space for a good number of books. I coped but this time around I went for 64GB to give me more room to work in. I've bought my wife a 16GB mini because I know she'll just use hers around the house and she won't be storing movies or music on it so 16GB will be ample.
The 16GB model has the benefit of being the lowest priced entry to the iPad world, and it is every bit an iPad.