16 x 16 RGB LED matrix

That is a ridiculous amount of RGB LEDs. You would never be able to drive them all independently. I would suggest multiplexing on a large scale. This is something to look at 11x8 Breadboard LED Grid - Arduino + tlc5940 - YouTube

http://code.google.com/p/tlc5940arduino/

Its tlc5940s with multiplexing. Others may know more about driving such a large number of LEDs.