Hi daveash18: As for the hard drive, I would say as big a HD as you can afford, but be aware that only 4 GB's or so will be useable under OS 3.1 unless you use NSD Patch, or a filesystem besides FFS....
A second vote for getting OS 3.9, for one thing no worries about hard drives bigger than 4GB. I have an 8.5GB HD on my A1200 tower, and I'm almost out of room, but I (try to) do animations, etc. which takes a lot of storage... so your mileage may vary
