It depends on what you're planning to do with it, really.
The way Android works is that by default it stores all its apps in the internal memory. That said if you're not planning to install every app available or want to install a GPS application with offline maps the 8GB version will suffice. Since Android 4 you can move apps to an external memory card, but that doesn't work with every app. Everything else, like photos, videos, etc. can be stored on an external card anyway.
In short: the internal memory is used for applications and their respective data. Some can be moved to an external memory card but not all of it. An additional SD card will hold your music, your photos, your videos and all other media you want to throw at it.
And in regards to Android 4.1 vs. 4.0: as far as I remember 4.1 is significantly faster than 4.0. If there's an update available for that tablet it's worth installing. Fiddling around with custom ROMs can be dangerous since it has the potential to brick your tablet.
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