The way you buy the iPhone on day one is the way that it will be till the day you stop using it. So while you may feel that the 16 GB version will suit you best, even though you have the 32GB version now, you don't know what may change?
What if you change jobs and your new job requires you to travel? You may find yourself needing to keep a GPS app like Navigon on your iPhone. With The maps downloaded to your iPhone your app could be 2GB?
What if you go to an event, like a wedding and start taking a whole lot of pictures? You'll need more space?
Worse yet, what happens if you get in an accident and you need to take video of the scene for your insurance? You'll need space!
In other words, extra space is something that you can not download from an app, you can't upgrade it in the phone, and you can't (or won't) want to force yourself to buy another phone down the road.
I had a 32GB iPhone 4. When I got it I was using about 8GB total. When I upgraded to the iPhone 4, I was using 24GB of storage. I bought a 64GB 4S and I feel that with apps changing, music purchases, audiobook purchases, thee extra $100 for the extra space will be worth it.
Everyone is different. But I like to plan ahead.