It is also worthy to note that the M16 comes in 4 or more different variations (or more if you include the numerous carbines that use the same receiver and action).
The original is the M16. It was only in service in the US Army for about 4 years, from 1963 to 1967, as it was a not very clean weapon, and was falsely advertised to be self-cleaning, meaning that in the jungles of Nam, it was never cleaned(above writeups can explain this), thusly causing a terrible number of misfires and jams, because of Eugene Stoner's "ingenious" idea of feeding the gas directly into the receiver, rather than using any sort of lug system like the AK-47. It also only had a 20 round straight magazine like its M14 big brother. Another problem is that the gun is not ambidextrous; if you try and fire it left-handedly, the hot brass will hit you right in your eye. Not a good thing, especially for us lefties.
Then, in 1967, the M16A1. This version was really what made the gun useful in the field. They added a little button called a forward assist which should be pushed in after reloading, to lock the bolt into place incase it didn't get locked all the way after firing. This version added in the now-standard slight-curved 30 round magazine(as opposed to karmaflux's 40 rounds). In 1970, cleaning kits were rammed into the cavity in the butt of the gun and training programs were started to ensure that soldiers cleaned their rifles properly. The powder in the cartridges was improved. Things were looking up.
In the late 1970s, FN introduced to NATO a more powerful round, the 5.56x45mm. It was a better cartridge than the old .223 Remington of the old M16, so Colt developed an M16 to fire this new cartridge, the M16A1E1, with a heavier barrel, tighter rifle twist, a more advanced rear iron sight, interchangeable round handguards (instead of the non-interchangeable sticky plastic triangular one of the M16/M16A1), longer buttstock and furniture made of stronger plastic, and the now-familar 3-round burst mode instead of full-auto. In 1983 this weapon was adopted officially as the M16A2 5.56mm rifle, which we all know and love. The M16A2 is the basis for the M4 carbine, basically a shortened version of the same rifle. Since the mid-90's, FN Herstal has been contracted to manufacture almost all new M16A2s for the US Military. So if you join the Army today(or since 1994), you'll get an FN M16A2 rather than a Colt M16A2.
The M16A3 is just an M16A2 with a Picatinny-Weaver rail on top of the receiver, under the removable carrying handle, and a full-auto option instead of the 3-round burst. It is not in any US Army or Marine Corps inventories, but you Canadians may know it as the Diemaco C7. This is the basis for the Army's automatic carbine M4A1, which also has the rail systems on top of the receiver and automatic fire.
The M16A4 is the latest addition to the M16 family. It has rail systems on top of the receiver, like the M16A3, but also has them along the handguard, for mounting numerous accessories, such as optical sights, visible or non-visible(infrared) laser pointers, forward handles, grenade launchers, visible lights, etc. This gun can accept all of the SOPMOD gear of the M4A1, plus all of the Land Warrior or Soldier Enhancement Program gear such as cameras for peeking around corners and computers which connect to the user's helmet. The weapon is being put into use in the US Marine Corps in Iraq (Most of the pictures you see of fighting Marines in Iraq are using M16A4s - look for a tactical grip in the front, and a split up front handguard), much like the M4 and M4A1 are into the US Army.