Memory & Storage Capacity
Another component that will aid in the overall performance of the smartphone, lies with its memory. Primarily, we are referring to random access memory (RAM) for those who are familiar with the term.
Previously, apps were limited to simple, uncomplicated ones that require little processing power. With the refinement of technologies, operating systems and an increased reliance on the mobile lifestyle, smartphones are becoming increasingly faster. As such, app developers are flocking to take advantage by creating bigger and flashier apps. Sufficient RAM allows for these apps to perform smoothly; with multi-tasking available in most OSes, having more RAM equates to a device being able to run more apps concurrently and is apt at handling app switching.
Newer smartphones offer at least 768MB to 1GB, such as the Samsung Galaxy Nexus. It is important to note that while the final performance for the app is also dependent on coding, having a more RAM never hurts. The current portfolio has seen an upper limit of 1GB. Phones that will be coming out this year still more or less follow this limit but there's still hope for even greater heights; word has it that the upcoming Samsung Galaxy S III will come with 2GB of RAM.
Tip: The typical range for memory now stands at 512MB to 1GB, which is sufficient for current needs. While more RAM translates to better performance for multi-tasking, don't get sucked into the numbers game.
The Storage Crunch
Like their bigger tablet counterparts, phones are usually preloaded with internal storage. Often, they come in 16GB or 32GB variants; Apple's iPhone offers an even larger capacity variant at 64GB. Of course, better specs also translates to a higher price to pay; the larger the storage option, the more cash you have to fork out.
Similar to RAM, a higher number is definitely preferred, but the important question here is: do you really need the extra storage space, especially considering that most phones these days (not all do; e.g., Windows Phone 7 devices, Samsung Galaxy Nexus) come with microSD expansion capabilities up to 32GB?
It all boils down to what you will be using the device for. If you wish to have your large multimedia collection within easy reach or you are someone who has many apps (especially games; graphic-intensive ones usually take up more space), a 32/64GB storage capacity will be the preferred choice. If you look at this from the perspective of someone who doesn't like to manage files, a higher storage capacity also means de-cluttering and making space for more important files is less of a concern.
If you're just someone who wishes to use your phone as a music player, 32GB should be plenty, with enough leftover for apps. Otherwise, users who fit neither of the above categories should go for the 16GB version, but note that the need for storage management might arise.