Excellent advice. A good, low mile garage queen 02 would be at the top of my list.
As far as hard bags vs leather- I've got both sets for my bike. The hard bags hold a bit more, but the leather ones will give a little if you've got something a bit oversize.
It's a lot cheaper to add leather bags to a standard than it is to add color matched hard bags to a classic.
I think the color matched hard bags have a more current look to them. Almost every custom bagger that finds its way into a magazine article has hard bags. The leather bags have a more timeless, retro look, which some folks find very appealing. Bottom line is buy the one that looks best to you. If you think you want both sets of bags, though, start with a standard and then look for a good set of leather bags.