Should I use a network-attached Time Capsule or a USB external drive with my MacBook Air?
it generally depends on being constantly connected (be it ethernet, wifi or some sort of 3g dongle) or not.

ultramobile and having the data everywhere where you have an internet connection: I personally have tried to host my 80gb itunes collection on a jungledisk (powered by amazon s3) and I can only say it's cumbersome. e.g.: you download new podcasts and end up re-uploading them to your s3 storage.

ultramobile and all your data at home on your network (e.g. time capsule or some sort of network attached storage): also did this for a while, no hickups, works great via 802.11g although I'd recommend 802.11n if you're likely to watch HD videos straight from your NAS/Time capsule.

ultramobile and all your data always with you: that's the approach I'm currently using, I have a 500g usb2 drive I carry in my notebook bag containing my itunes library and assorted other data (iphoto library and what not) that doesn't fit on the internal drive. 
It's my favorite solution as I have my data on me even if there is no internet connection available.

cheers
florian