same here its all about whether price matters, but with videos you can never have enuf room, also better quality songs etc... so if possible the 16 is obviously the choice to make as i like to have all tv series rather than just ones i havent watched but bottom line:
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PRICE!!!
well it really depends on what it'll be used for, if its music, movies and tv shows, photos, etc. you might wanna get the 16GB. Couldn't be happier with my 16GB, plan on putting more movies on it eventually (4 atm).
The strength of the Touch is in displaying video. I keep a big collection of video podcasts and movies/tv shows on my Touch at all times. 16GB doesn't go that far.
This thing is actually not a great music player - no physical volume or track controls, plus it displays album art of whatever you're listening to to everyone around you (unless you turn the screen off).
Its a great music and video player, but the video is probably the best part. If the person the gift is for is into movies and tv shows and has a lot of content, you gotta get the 16 GB.
Get the 16GB or you will regret it. The SDK for developing applications will be out in February, which means your Touch will be much more than a music player and a browser (can be now if you jailbreak).
You will need that extra room for files, ebooks, etc. because of the new applications that will soon become available. Remember rule 16 of the Golden Rules of Technology - One can never have too much memory.