It depends. Getting more space may be shortsighted. You won't keep the first-gen iPad forever. I suspect most of us will upgrade to iPad 2 next year.
Meanwhile, since none of the models can hold all of a media library, the choice mainly amounts to:
- have a small fraction of your library loaded, rely on streaming for everything else (16gb)
- have a little more of your library loaded, rely on streaming for the rest (32 gb)
- have a moderate amount of your library loaded, rely on streaming for the rest (64gb)
If you approach it philosophically from the perspective that you will mainly stream media, there's no need to load more than some favorites. For example ... I don't use the iPad for music, I use iTunes (at home) or my 64gb iPod (everywhere else). I don't watch movie files I've saved on the iPad, I watch streaming Netflix.
As for these hypothetical 10gb apps people keep talking about, I'll believe it when I see it, and in any case, a 64gb iPad could hold a max of six of them ... again, it's not like you're picking between 25KB and 2TB.
There is no technical disadvantage to more space. It doesn't weigh more, it doesn't make the battery die faster etc. It just costs more. There is appeal in getting the max size just to resolve the issue as best you can, but I suspect a lot of people with 64gb iPads load it up with media they don't need on it out of habit.