I've recently upgraded from a 40Gb(was starting to fail) to 160Gb. HUGE leap.
I've created a 30Gb Windows partition, the rest of the capacity is unused, and will probably remain unused until I upgrade the drive. On the 40Gb drive, I only used a 20Gb partition.
Even 20GB was more than what I needed, I had about 5 Gb to spare. I just install XP, apps that I need to use, and store some pics and vids of family and friends. For me, anything more than 20Gb is just a wasted space that I will never use.
So how much capacity do you need?
EDIT: I'll add that I don't download music or movies etc, all of which would consume huge amounts of capacity.