I use a Paasche Millenium... Not expensive and does everything you need for 1/16th scale tanks. Very versatile with regard to what medium you can run through it... I've also go Iwatas and Sotars too, but have yet to pick either one up when working on my tanks.

Compressors... Early on I tried a few and came to realize a "silent" compressor was for me... The noise on some of the cheap ones will drive you to distraction. What you should look for in a compressor is one that has a moisture trap, regulator, and some type of tank that holds the air. I tried one that did not have a tank and the air would come out in pulses...