Short answer :
The Swap partition is hidden and works automagically if required by RAM hungry programs (Firefox ex).
The Vfat houses all your PNDs/Media, so as big as possible is better.
The OS ext2 partition will use the remaining space. You may want this larger if you want dev tools etc.
So:
16gb card, Choose 14.5gb VFat if no Dev tools wanted (13.5gb is you do want them), 512mb swap, let the OS take the rest. Reboot.
Modify the autoboot.txt to boot.txt in the PANDORABOOT partition thats created if you dont want to autoboot to the SD install. Enjoy 
Long answer:
If your using a 16gb card you should probably allow about 1-2 gig for the OS on the EXT2 partition, as upto 900mb is used by the OS and if you want to install development tools aswell, you'd take up at least another 700mb. The spare can be used for opkg installs to the OS, though that may take forever to fill.
The Swap partition is hidden and works automatically if programs need more RAM than is physically available. 512mb is double the RAM and a reasonable amount.
The Vfat is where everything else will go (as PND's and media cant easily be written to the OS partition as its restricted and requires using the terminal to shift files about in it) so make it as big as possible.
The SD installer asks things the other way around though, so for a 16gb card :
Choose a vfat partition of about 13.5 - 14.5 gb (depending on if you want alot of space with the OS for dev tools, updates, angstrom apps etc)
Choose a 512mb Swap partition
SD installer will use the rest for the OS which itself will take up 600-900mb.
What you will/may find, is that the OS partition size wont be quite as large as its predicted to be, as the SD cards cylinders don't entirely match up, so sometimes you'll need to remake the card, to get the desired size of OS partition if you want plenty of space there.
This is a good setup, as if anything goes wrong with the OS, it will only damage that partition and your data is all intact, as is the swap partition. Your NAND install aswell.
However, your point about using this for easy updates of the OS is kinda moot, as you cant re-run SD installer with a new OS image and expect it to not wipe out your data partition in the process. It wont just write over the OS partition but the whole card. Only when ED releases PND versions of HF updates, can they safely be run and not affect your data, or your desktop customisations.
You can however take an pandora-rootfs.tar.bz2 image file and untar it directly onto a blank OS partition, as if manually making an SD card Install. I just did this with HF6a3 onto a previously HF5 partition, after testing HF6a3 on a separate card first.
To do this :
Grab the same pandora-rootfs.tar.bz file that ED offers for the HF6a3 SD install.
You'll be booting from the NAND install here, as the OS partition is blank or corrupt etc.
Use Gparted to unmount the OS partition, then format the OS partition to EXT2 and then to 'label' it with your chosen name. Close Gparted.
Open a terminal in the same location as the Image tar and type 'sudo cp *tar.bz2 /media/<nameofblankOSpartition>/' (This will copy it to the root of the blank partition). This step could be skipped with a direct command to untar the image into the OS partition.
Go to the blank partition now containing the image with Thunar, or from terminal go there with 'cd /media/<nameofblankOSpartition>/'
Then unpack the image file to this blank partition with 'sudo tar -xf pandora-rootfs.tar.bz2' (you'll see SD light activity for a minute or so, as it unpacks). Alternative arguments after tar -xf could be used to watch the untar process but that does work anyway.
Then delete the tar file from the partition to reclaim the space 'sudo rm pandora-rootfs.tar.bz2' then close the terminal and reboot.
It should reboot into the new SD install.
If you've changed the HF level that you are replacing the OS partition with (like I just did) then you may need an additional step to replace the kernel uImage that SD installer places into the Vfat (PANDORABOOT) partition with the one provided in the pandora-rootfs.tar.bz2 of the newer HF version.
In my case it booted fine but the 'CPU settings' option was missing from the settings>menu and the CPU speed icon on the handy panel were also missing until I swapped the newer uImage files into place.
Also of potential interest to some (?) is that it is perfectly possible to use imaging programs to copy the partitions individually and successfully restore them to their relevant partition on the same card. It could be a windows product like Acronis True Image, or a free onelike CloneZilla if you can figure it out, or as Dave1234 said in his thread, under linux you can create and restore images using the dd command (but you'll again have to figure that out if you have the time). I dont so I stuck with Acronis and this can rebuild your OS and data partition in minutes, which when its 32gb+ of data can take along time to manually copy across to an SD card.
Hope that's of some use
