Ipad 2 is fine for photos. the salesman where i bought mine from said unless you have used the ipad 3 for a while, the screen clarity is barely noticeable. my ipad is beautifully clear for photos.
I have the 16 Gb one and in my settings it says i havent a lot of memory left, even though i havent got more than 5 pages (icons) of apps and 3 albums of photos. (my PC has zillions!). Having said that my ipad has never said i've not got any memory left, so i would discuss whether a 32 Gb would be better if you are a heavy user.
Can't say for iPads, but I bought both an iMac and a MacBook Pro from the refurbished Apple store. They were sparkling new looking and didn't have anything wrong at all. Still going strong 4 years later.
I have the iPad2 and use it all the time. I don't keep many pictures on it but as you seem to I would advise getting the 16gb one which I have. The retina display on the third and fourth versions may be more suitable for you than the picture on the iPad2 also.
Im thinking of buying an iPad 2 for £319 with 2years guarantee from John Lewis. They also do the mini for £269. I'm sure I've read that apple do sell refurbished pads on their website, has anyone ever got one from them? Also apart from a bit of shopping, browsing & storing pictures etc that's all we do on our slowly dying laptop. No major film or music down loading, so is the iPad 2 sufficient & because it's not a vast difference in price am I as well going for the normal size? By the way it will be left at home not taken out & about