32GB isn't currently feasible because of the memory chips available and their cost...
16GB is going to be plenty for me... I have an 8GB Nano that I don't even have completely full. Assuming I move all the music currently on there over to the iPhone, I'd still have > 8GB for 3rd party apps and data... One of the biggest ones for me will be the TomTom app, and considering my last handheld GPS (Garman eMap) used an 8MB memory card and could hold pretty detailed maps at that size, I think I'll still have plenty of room to spare.