Well the capacity is worth the money with the following conditions:

1. This is your first iPhone/Touch
2. You are a movie/drama buff
3. You have a large collection of watched/unwatched movies/drama
4. You travel by public transport everyday, and for a substantial period (say >30 mins)
5. You are willing to spend hours converting movies to iPhone/Touch compatible .m4v format

I believe these are the minimum requirements a person should meet if he/she wants to make the large capacity iPhone/Touch worth the money.