Thanks everyone....
Did some reading on when the next one is out. So many different thoughts. It would be nice to have it before our trip but I bet it will not be out.
I think it is highly unlikely that it would be out before June/July, based on what they've done in the past. The last couple of years in March they have had an event talking about developments in iPhone software and then their big WWDC event in June announcing a new iPhone. The iPad launch is going to be March/April, and I don't think they would simultaneously launch that and a new iPhone, so summer makes more sense.
At this point, there are only rumors as to what a new iPhone would include, and it's possible you may not care about whatever they add. You don't want to be like one guy I know, though, who bought the original iPhone two weeks before the 3G came out. I would have been highly annoyed if that had happened to me. It's also worth being aware that anything you hear about all of this is just rumor (and there are lots of rumors). Apple is very, very secretive about what they have coming up. Some rumor sites have reasonably good information, generally close to the time of release (controlled leaks from Apple?), but no one ever gets it 100% right. For what it's worth, Steve Jobs recently said the new iPhone would be an "A+ update," whatever that means.
Should I get the biggest GB they have?
Just remembering being told that the 420 MB hard drive I was buying would be "all you will ever need for the rest of your life, you will never fill it up"....now was that ever wrong!
That really depends on what your needs are. Just something to think about - I do think there is a very good chance that the next model of iPhone will have a 64 GB option (there already is a 64 GB iPod touch).
How much will you need? Well, what do you plan on doing with it? I have a 32 GB 3GS. I have roughly 6 GB of audio, maybe 2 GB in apps, some movies, pictures, podcasts, etc., and I have almost 20 GB remaining in free space. That said, I don't like having every single app I own on there because I don't like it too cluttered, so I add and remove apps all the time. I only keep movies on there if I think I am going to be watching them (I actually don't do much with movies on my iPhone, but have several on an iPod touch for my daughter if we travel). When I take pictures or video, I tend to download those to my computer and delete them from my phone, so I don't store a lot of that on there on a long term basis.
So it really depends on how you think you will use it. If you are the kind of person who wants to load everything up and not think about it again, you will need more memory. If you don't mind syncing and unsyncing stuff from time to time, you can get away with less. The big memory hogs are video (depending on compression, a full-length movie can be 1-2 GB) and some apps. Some games especially may be >100 MB, and that can add up.
As I said, for me I have about 20 GB out of 32 free, so I could keep a lot more on there than I do, and probably would have been fine with the 16 GB model. That's what my iPod touch is, and I have about 4 GB free on it. With the touch, I have more movies, but fewer apps, so it's probably a fair comparison.
I don't actively worry about space, but I do like my phone uncluttered. Most of my music collection is on my phone, but I have no need to carry 15 full length movies with me everywhere I go, or every app I've ever tried, or podcasts I've already listened to. It's just a matter of personal preference. The iTunes app management system is greatly improved from what it was before, so it's easy to rearrange, add, and remove apps from your computer when you sync. But again, if you don't want to think about any of that, get more memory.
If you are thinking of the 3G versus 3GS, I would say get the 3GS if you can. The 3G will be two models old soon. The 3GS is much faster. When you are used to it you don't think about it, but sometimes if I use my husband's 3G it is very obvious that it isn't as quick. The 3GS has some new features I don't use a lot (compass, for example), but the video recording is nice. Sure, it's not the equivalent of a standalone video camera, but in good light it takes very decent videos. I find I use it much more than I ever used a camcorder, just because I always have it with me.