As I said above, I don't plan on reselling this since I'm a Sprint customer, and I'm content with waiting for 2 years until the next upgrade. Considering that the 3GS is over 2 years old and it's still capable of doing everything (it can run iOS 5, yes?), I'm not really concerned. I'm fine with getting the entry-level iPhone every 2 years.
I'll take that $100 and invest that into the higher-storage-model iPad 3 when that launches, as that will hopefully last me longer than 2 years (going on 7 with my iBook G4 right now and that runs wonderfully still)
The 16GB should be fine. That's what I'm getting. I will just do nightly transfers to my laptop to off load all the pictures and video taking up space.