£369 is the 3G/GPS model (not £450, unless you're getting 32GB model).
An external GPS, in my opinion, is better than the built-in GPS, because you get a more reliable GPS signal with no dropouts, I don't have to worry about the iPad having sight of the sky (useful if I want to just store the GPS track - I can keep the iPad in my flight bag in the back of the aircraft) and the iPad battery doesn't drain as fast. An external GPS will generally use a rechargeable battery that lasts 10-12 hours of usage, so more than enough for a couple of days of flying. You can re-charge them very easily using a USB cable. But if you will be using 3G on it, then you obviously need the 3G model. I have a 3 MyFi to create a wifi hotspot, which works well in-flight.
As for the amount of storage you need, that depends on what you will be using it for. I have quite a few maps on Air Navigation Pro and Sky Demon, a large number of non-aviation apps, and I only have 2.7GB free on a 16GB model.
Air Nav Pro uses 1.6GB
Sky Demon uses 800MB