The 16GB shoots video, the 8GB doesn't. That's about the only real difference I see. I have the 8GB phone, and it's been great for me. I don't use my phone as a multimedia device. I get enough of that crap at work!
Well, the main difference to consider is that the 8GB is the original 3G. The 16 and 32GB are the 3Gs - the faster (almost double in speed/graphics performance) version.
Another point to consider if you are going the jailbroken/unlocked route is that the phones run slightly slower. You may want to have a 3Gs (faster version) for that, just so that the phone runs at an optimal speed.
My 3G iphone gets pretty laggy, the 3Gs should be a hell of a lot faster. And I'm sure you'd be kicking yourself if you got the smaller one - you can never have enough gigs.