Sheri, I was just kicking myself over the weekend. I have the 6GB Mini, which I love, except that after "ripping" all our CDs to MP3's, and with new songs I've picked up, I have about 12GB of music files. So it's hard to decide what goes on the iPod and what doesn't. I just spent a lot of time yesterday figuring out which songs to take off, so I can add some new CDs that I've acquired. I don't think you can go wrong with more capacity than you think you need.
It depends if you'd like to have your whole music library at hand (if so, go for the most capacity you can) or just have a smaller number of songs that you really like for walking, working in the yard, etc. If a smaller number is OK, and you can narrow down your songs easily, the nano is nice because it is so small.
I outgrew my iPod's capacity faster than I thought I would...
Dena