Okay, I've got a 32GB version that I want to back-up with iTunes, that's all fine and dandy. Now, will I be able to use that back-up on a 16GB version? (obviously not if all the info is greater than the capacity of a 16GB ver.) Just wondering if i restore the 16 from 32 back-up will it work? Thanks

No each device has its own back up it is not shared however one can use itunes to manage your music etc for each device. Once you sync the new device it will create its own back up After you sync and you decide to do a restore each will back up and restore its own data

I recommend creating in itunes different music playlists for each device
like Pad16 - Jazz, Pad 16 Bedroom music, Pad 32 party music and so on
You can duplicate existing playlists and just add what you need
I have an 1 iphone, I pod touch and soon a Ipad 32 and AppleTV all with different playlists
Music that I want on all three other than Appletv is in On the go 1, 2 and 3 and my lovely lady has her music in her playlist ie Malou 1, 2 and 3
I also have AppleTV which syncs all music and all photos and movies as it is 160 gb in size

It is important to turn off auto sync and manually handle syncing that way you have more control
In itunes once you mount the smaller ipad select the tabs and click the boxes that you wish to sync applications , songs(playlists) and picts and movies.


Hope that makes sense

Here is a link to Apple with instructions on switching devices, thought it might help.
iPhone: Transferring information from your current iPhone to a new iPhone

Ellen