I think 16gb will be fine. I think the whole Scott set takes up about 4gb and they tend to be the largest. Regarding the iPad 3, it does have a lovely screen but the battery required to run it for an acceptable time period makes it a bit heavier and it takes ages to charge the battery. I have both a 2 and a 3 and prefer the 2 if I'm honest.
The iPad 2 can be bought for $399 new these days. It's Apple's new low end model. Apple also sells refurbished iPads that have the same warranty as a new one.
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