2 gen also already has the new software installed whereas I think you have to pay to upgrade the 1st gen ones.
2 gen also has tried and true technology over the 1st gen. 1 gen was a tester imo.
16gigs is a lot of music...anything beyond that and you just don't trim your collections down, and need to. There is a SHIT ton on my 20gig iPod (that's only like 60% filled) that I rarely touch.