Tub sizing advice

First, thanks for creating this site and forum. I've already learned quite a bit just reading through older posts, and the toilet 'buying guide' is nothing short of awesome.

I'm trying to determine how limited my options are for a replacement tub in a 7' x 8' bathroom. The original tub was a 30" cast iron brute that is no longer with us . The alcove itself is 60" x 32 1/8" at it's shortest point. (One wall is the full length of the room, while the 32 1/8" is the side of the closet)

When the new tub is installed, should there be a 1-2" border left between tub and the corner of the wall, or is it acceptable to have the tub and the end cap of the wall be at the same depth?

Basically, I'm trying to see if I can somehow make a 32" tub (which greatly expands the options) work in place of the 29-30" models without making the tub look like it doesn't properly fit in the space. In addition to changing how the shower tile edging would look, I'm not sure if I should be concerned about losing that little bit of wall as a splash guard for the rest of the bathroom.
Thanks!

If you opt for the larger tub, you may want to extend past the tub for a better reveal.
It's hard to make it look right if the tub is even with the corner.
I like to see 2" past the edge of the tub.

I'm one of the people in the minority that acutally uses my (air) tub to lounge in. If you do, consider moving the walls and putting in a 6' tub. The unfortunate thing then, though, is that most are wider yet. You'll also probably find that an acrylic tub will have a smaller actual tub than one made of cast iron. That width difference can be significant, so look at that in addition to the exterior dimmensions.

Thanks for the responses. Terry's answer is exactly what I was thinking from the reveal perspective. I wasn't sure it would look right even, and you've reinforced that.
I could extend the wall, but due to the already narrow opening for the closet I think that would make the "shoulder room" even more restricted. Still, I'll mock it up and see how she'd look.

Jim - I never even considered lounging, but that is an interesting idea. The main thing preventing me from doing that though would be the loss of the 2x3 closet, and closet space is already at a premium for us. As much as the wife would certainly appreciate the bigger tub, I think I'd be hearing about the loss of the closet even more!

Looks like it's settled then ... if the extended wall doesnt look/feel right, I guess it's back to the smaller tub and hope I can find one with at least a little aesthetic appeal. Thanks again guys.