Well, I've a 8GB Nano at the moment, which I cope just fine with at the moment. However, my music collection being something like 40Gb, more space is always nice. Ideally Apple would release a 16GB version, so I'd keep 8GB for music, and 8GB for movies/tv shows. Not that I ever really feel the urge to watch movies or TV shows when I'm out, apart from on long train and coach journeys.
As long as the highest capacity remains 8GB, I don't really feel I'm 'upgrading' in any sense from my 8GB Nano and cheap crappy Nokia phone I have at the moment (and which suits me fine).