For now, I think it would be wise to build up their conventional naval strength. To join the nuclear club, that's for the Really Big Boys to decide....
If Taiwan is permitted to have a nuclear deterrence, then we could have a nuclear arms race throughout the region (a bad thing). Secondly, if Taiwan is overrun by China, Taiwan's nuclear arsenal would be appropriated by China (a bad thing). Thirdly, if Taiwan could not secure their nuclear weapons facilities properly and they fell victim to an armed assault and heist (potentially via state-sponsored terrorists?), that would be a Bad Thing (however unlikely). Lastly, how can an island nation such as Taiwan deal with radwaste?
I like the theory of a credible deterrent for Japan and Taiwan, but the nuclear card has some snags in it.
Fifth, and last, extremely far-fetched scenario, RE: Japan, I won't even say ....
China definitely needs to be quarantined, however, and hopefully Japan will step up to the plate and stop China's expansion at the Senkakus with naval forces being peacefully deployed as a deterrent to protect Japan's EEZ.
Events that are unfolding almost daily prove correct all those who have been saying for years that China is a threat.
We are already in an arms race. Taiwan keeps purchasing missile defense hardware from us while China keeps building up the missile pointed at the island. Furthermore Bush has been the only person in our government who wants to make more nukes while the ChiComs make more nukes. I think the nuclear card is a risk wirth taking.