Just to keep everyone in the loop, i've decided to go for the iPad 2 16gb. I went for it mainly because the iPad 3 - the third generation - had so few things new to it, except a marginally better camera, 4G capability (not available in the UK and won't be for some time) and a retina display, which I wouldn't need because i'm not a gamer.
I got mine from Orange (am an existing customer with an iPhone 4), so only had to pay a 99p delivery charge and for a 24 month Orange contract with a 10GB 3G allowance is costing me £30 a month. The Ipad 3rd generation would have been £35 a month on Orange - and I didn't think warranted the extra £60 a year for little more than an Ipad 2 with a marginally better display.
I contacted 3 and they were less than helpful on the phone, they wanted an up-front fee of £69 and then £25 a month after that - plus reading reviews of 3's 3G coverage, a lot of people were less than impressed. Also, i'm an Orange customer already, have been for over 10 years and have always been happy with their 3G coverage in the UK.
So that's what I went for in the end.