Haven't read the above so excuse me if this has been covered.
iPad1 is how great value, and really for most more than adequate. No cameras but how many devices do you need with a camera? If you plan to use the iPad for video calls then consider the 2 or 3, but for basic media consumption, some games, surfing, email etc, the 1 is grand, and cheap now: PCworld refurb on eBay had some recently for £190, and no doubt will have again soon.
If you've got the money get the 3. It's faster, more powerful and have a stunning display compared to the 1. It also has cameras front and rear, if that is important to you.
The 2 is no mans land. Only marginally better performance than the 1, but does have the camera, otherwise it's more or less the same. There are some deals on the 2 at the mo, again PCworld refurb on eBay is selling 16gb iPad 2's for £260v whereas the 3 will cost £400.
As for space, 32gb is best. With the 16gb you'll soon start to run out of space and find yourself having to manage the media on the machine carefully. The 64gb is just too much space, unless you want to carry loads of docs, movies and music, but the 32gb is the sweetspot IMO.
I have a ipad1 32gb, and we use these in work too. My daughters have the 16gb version of the 1 and they're robust enough. My wife has a ipad2, and it's nice, but really she only got it as it was cheap. I will get the 3, once they appear in the apple refurb store or via Argos or PCworld refurb on eBay, but I'll certainly not be paying full price for one.
Once you've got it, Jailbreak it. As standard, that is locked down, they are a bit shit. Really restricted in what you can do. Once Jialbreak'd you can do so much more with them. Jailbreaking them is a bit of a learning curve, specially if your not techy, but it's worth learning.
If you have a media server at home you can install (once Jailbreak'd) XBMC which is an awesome media centre front end, with it you can stream any media from your media centre providing your connected to the same network. Again, takes a bit of setting up, but worth it.
For playing movies stored on the iPad you don't need to use iTunes anymore, get Goodplayer, it'll play more or less any type of movie file and does away with the balls ache of converting everything to iTunes format.
Sorry if this has already been said above.