I have the 16GB original iPad and I've hit the storage limit many times. I hate having to limit what I want to have on there because of the small amount of space. I would highly recommend going with the 32GB at least with this thing. The 16GB version just isn't enough. I'm really looking forward to my 32GB iPad3 when it gets here.
The thing is you don't actually get 16GB of storage. For my 32GB, I only got like 29GB, so the 16GB will be like 13-14GB. This is normal though
If you're low on badget or you would like to save some money, I'd suggest you get the 16GB model first and see how it goes, within 14 days and decide wether you need the extra storage or now. Most of the time you don't know what you need until you use it. This is just like the iPad, you have to use it in order to know how magical this device is "For most people "
I'd say if you're not planning to store any movies on your iPad, you should be JUST fine, because iTunes will compress your photos for the iPad, so it won't sync a full size photo except you import your photos via Camera Connection Kit.
I most definetly could have filled a 64 if I wanted, but I've been on a 16 for a year on my 1st gen and have been able to keep it with free space, I'd say if you don't necessarily need 80 different apps regularly you could survive with the 16, but if you plan in gaming much, i'd spring for the 32.
How do you want to use your iPad? Are you using it for music and the occasional movie? Are you someone who has a ton of apps? It varies from user to user. I use mine for loading the occasional movie web I go on a trip. No music as that's what's my iPhones for. A few games and mostly business and productivity apps. I went with 32GB because of saving files and such. For me 32 is the best fit. I came from a 64GB and I never used it. 16 would be too small.
Rule of thumb, if you are worried about not having enough space go the next model up because it is MUCH better to get the correct capacity the first time rather than having to sell it (at a loss unless you get a dummy) and then having to pay the difference.
File sizes are always growing and with the retina display some of the programs are going to be a gig or more.