The M-16 was adopted based on a bunch of faulty assumptions, the primary one being that "it is better to WOUND an enemy soldier than to KILL him, because that ties up four other soldiers taking care of him". I don't think this is a valid assumption for any but Western armies (like ours and other NATO types).
As far as ammunition weight and bulk being a limiting factor, I note that most of thse troops are in some sort of vehicle most of the time- and ammunition resupply is therefore not a big problem.
I will say one good thing for the M-16- it is accurate. I used to teach it, and it was MUCH easier to get trainees through with acceptable levels of proficiency with the M-16 than with the M-14. You do lose range and knockdown power, though.
You'll see me talk about the M14 glowingly later in the thread, however, you'll also see me note it's faults (football/football) :o)
The M-14 is an excellent battle rifle, but I'd go for the FAL any day (I've owned both in semi auto, still have the FAL. I've fired both in full auto versions, the FAL is useable, the M14 is almost uncontrollable). Neither would be my choice for any close quarters combat, just too long and too much recoil to go at it in 10 foot rooms easily. Personally, I'd prefer the Krinkov AK variant for urban assault use, heavier caliber than the little sub guns but still small, quick handling, and controllable.
In any case, I'd prefer the AK (either 47 or 74) over the M16 for extended rough duty in an adverse environment.