Dd2 is 40" tall and just switched from her Strider balance bike to a 12" bike without training wheels. The Strider didn't have much room left to grow, but it did make her transition to the 12" bike very simple. I resold the balance bike on Craigslist for $5 less than I paid, so it was definitely worth it! Strider does make a taller seat post for older kids, if you want to go the balance bike route. Generally, the thought is that when kids are just getting started without training wheels, a slightly small bike is better than a slightly too big bike. They feel more secure if they can easily put their feet down on the ground. The 12" bike probably won't last Dd2 long since she is so tall, but a 16" would be too much for her right now.
Allison
DD1 11/05
DS 04/08
DD2 11/11