I put "Yes, all of it" even though I only have 70% of my music on it. I don't keep 100% of music anywhere (I have CDs I haven't ripped onto iTunes, and I have MP3s on my computer not on my iPod).
I kind of see it as a waste to have an iPhone and have no music/media on it (after all, one of its top features are the iPod aspect).
But I can see people not wanting to waste battery life on media. Either way, you should at least put music on it and use the 16GB you paid for or whatever and maybe in that one random time you need a tune, there ya go.