The Slim really doesn't take up any less space if you compare the dimensions, so if physical space is a concern it really doesn't make much difference. The main difference between the two is that the Slim is quieter and has a bigger hard drive (though you could pick up a 40GB model used and put a 320GB drive in it for the same price as a Slim).
Actual reliability of the Slim is unknown, but I would personally wait a month or two for Sony to weed out the various "overheating" and "catching on fire" problems that they seem to have with every initial batch of Slim versions of their consoles.
Also, did you mean PS3?