IIRC the first 1040's were made with the 128's in mind, thats why some have the Commodore sticker up front and then later the Amiga branding when the Amiga came out.
I get my first C128 sometime in the next week or so, so I can't wait to play with it. The C128 D (CR) is the more desirable. you know they used the same case for the desktop version and recycled it for the Amiga 1000? (same thing with the C900, recycled the case for the Amiga 2000)
The funny thing is, most other 8bits at the time were just adding 128 Ks of ram to thier units, but keeping them generally the same (the CoCo 3 is a good example). Commodore chose to go a different route with the C128.
I have heard if you have the flat unit, one of the first things you will want is a Video Ram upgrade. The flat units only had 16K of Video ram, where the desk top had a full 64K. Upgrade kits are inexpensive (about $25) on Ebay.
A good site is
http://www.commodore128.org.
Just joined them last week, have tons of good threads on there