PS3 slime(smaller version of their first gen's), and I'm happy with it. It doesn't play any ps2, or ps1 titles, and if memory serves only a certain subset of the first gen's do have the reverse playback options(I believe the 60 gig 1st gen PS3's).
I just checked out the specs between the 160 gig system, and the 320 gig one, and both appear to be about the same, with the exception of the hard drive space(I had to relook, because I swear the 320's had a faster cpu, but they don't).
I usually never buy used tech, unless its uber cheap, mainly because it would chap my ass if I spent say, 200$ on a used system, and it dies on me because I didn't know what the previous owners did to it. With a new one, at least you know how it was treated.
With the size of the harddrive it depends on what how many games the user plans on downloading, most games don't take up much space on the harddrive. The last time I looked at my harddrive I was just under 40gigs used and I have at least 30 different game save files, and the huge DC Universe Online Legends game(which currently holds damn near 20 gigs now).
I went with the cheaper 160 gig one because it was cheaper, saved me 50 bucks because I figured I wouldn't ever be able to fill upp the hard drive unless I used it for other medias(mp3's).