Just throwing my two cents out there, but I have well over 32GB of movies, music, and photos of media in iTunes. But why the hell would I ever want to carry that around all the time? Beside the fact that I have an iPod that carries that in my car at all times (minus photos), it seems a little crazy to carry all that content all the time. Maybe it's just me (coincidence), but when I used to max out the capacity on my iPhone, it was painfully slow.
Anyway, my point is that while you may have a ridiculous amount of media content, are you really going to carry it all around with you all the time? If so, then go with the larger. If you're like me, and only carry around about 100 of your most recent and most listenable songs, then go small. Pandora and Slacker Radio are invaluable to me. After about a week of working with either one of them, they'll pretty much only play the kind of music you like, and they're both free. Best of luck with your decision and Merry Christmas. An iPhone Christmas is always a good Christmas.