I use iTunes so that's how I'm familiar with doing it.
Hook the 16 gig 2 up to your computer and iTUnes and do a full sync and backup. Unplug it and set it aside. Plug in your 32 gig 2 and do the same.
Buy your Air and go through the setup procedures. WHen you are faced with the choice to 'set up as new or restore from backup' choose the latter and restore your Air from the backup of the 32 gig iPad 2.
Poke around and verify that everything is on there. (you will need to set up wifi, etc, but the data should transfer over.
Once you're happy that your Air is a clone of your 32 gig, go into the settings of your 32 gig and 'erase all content and settings'. THis puts it back to 'out of box' state. Then go through the setup procedures for the 32 gig 2 just like you did the air. Except this time restore your 32 gig 2 from the backup of the 16 gig 2. Basically using iTUnes to clone her old 16 gig onto her 'new to her' 32 gig.
Once you're happy that the 32 gig has everything on it, you can take the 16 gig, do the 'erase all content and settings' and wipe it clean and then you can sell the 16 gig if you want. Or however you want to handle it.
Look at this link.
Giving your former iPad to a spouse or family member: the quick guide
What to do before selling or giving away your iPhone, iPad, or iPod touch
How to Transfer Everything from an Old iPad to New iPad
iOS: Transferring information from your current iPhone, iPad, or iPod touch to a new device