16-bit vs 32-bit color difference?

It really depends on many factors and what specifically you're talking about.

If you mean the Windows desktop color depth, yes- you will see noticeable grainy/banding in true color images. If you pull up something with many shades of a single color, you'll see the color banding at 16 bit that will be much smoother in 32-bit.

For example- try viewing the linked image below to see an example of color banding that occurs between 16 bit and 32 bit color settings:
http://img452.imageshack.us/img452/8343/gradient32bit3ze.png

Now, if you mean in games- some games use dithering and other things to reduce banding. Plus many older games do not even provide true 32-bit textures, but instead 16-bit. While running games in 32 bit can improve shading/colors, some examples gain very little.

Overall though, most "modern" videocard truly no longer gain a big performance improvement between 16 and 32 bit. Even lower end 3d and 2d videocards should not suffer much measurable performance difference between 16 vs 32 provided they have sufficient frame buffer/video ram for the resolution used.