If you're planning on keeping both, then go for the smaller one and save some money. If, however, you'll be only carrying the iPhone or you watch a lot of video, go for the larger one. You can't really have too much space so you don't have to always swap songs out, etc.

If your not going to do anything other than basic smartphone features the iphone will work great I would get the 16GB though. Like the space. but I wouldn't buy one for business use.