I have a 2015 15 inch mbp at home, sort of showing its age now, starts heating up and getting loud when watching higher res youtube videos.In terms of performance, an M1 MacBook Air with 16 GB RAM is more than enough for development. My MBA has double the CPU performance of my work-issued 2015 15" MacBook Pro that I use for development. I simultaneously run 2-3 VMs plus many browser tabs and chat software and an IDE on my Intel-based work MBP with 16 GB RAM without issue.
What is a bit lacking right now is the ecosystem for some types of task. For instance, we don't yet have official support for the gcc and the gfortran compiler, which is a dependency for many math-related packages using BLAS (such as numpy), though Iain Sandoe is working on it (https://github.com/iains/gcc-darwin-arm64). We're also waiting for Docker and Parallels/VMWare if you need to run Linux. A native version of homebrew is not yet available. For embedded development, common cross-compiling toolchains would need to be run under Rosetta or recompiled from source, since native ARM64 binaries for Mac aren't yet provided for most.
Six months from now, the ecosystem for ARM Macs should be much better, but the hardware is great and ready now. If you're not dependent on software that isn't ready or are able and willing to run them under Rosetta, get the MacBook Air.
I have opted for the 8gb variant of macbook air. Was thinking 16 but I think I will just sell mine if and when 14/16 inch macbooks are released.
I do work as a software engineer and mostly use vscode and intellij for java and javascript development. Generally do not need to build anything big on my home mac so I am not too concerned. Hopefully the 8gb holds up.