I use to have an old 16GB touch. I couldn't hold all my music plus a movie or two (and I like to just put my music on "shuffle" while I'm on a plane unless I'm in a specific mood for something). So when I upgraded to the 4th gen, I got the 32GB. Couldn't have made a better decision. I'm able to put a good amount of movies on it, as well as all my music + apps.
If you can afford it, buy the 32GB. Because there will come a time that you'll reach the max memory on the 16GB and kick yourself for not getting the bigger one.