I would think about whether you want the windows in your house to match---it would bug me a lot if mine didn't, which is why we sprung for wood windows on the two we needed to replace. (We're a little nuts and actually had a local shop build them to match the rest of our windows, which is not exactly a recommended strategy from the money perspective---but it was important to me that they not stick out as replacement windows.) Ditto for the trim/color. If it doesn't bother you and you'll be in the house long-term (or you plan to replace the other windows to match eventually anyway), it's not a big deal, though.

I would probably go with casements, though. We have the same problem, though in our case, our double-hungs over the sink are in fine shape and don't need to be replaced---but I can barely reach them to open them with the current 22" deep counters, and it's going to be a huge frustration with the new counters. If they ever do get replaced, I'd absolutely look into casements. Alternatively, you can just get a small stepstool, which is what I think I'll end up doing for ours.

Not sure that helps much, though---I think it's more of a personal preference thing...

It would bother me to see vinyl windows especially if they are wood elsewhere in the house. My vote would be to go for wood.

I did exactly what you're doing. We put a new window over the sink, casement and internal grids. Loved it! Easy to operate, easy to clean. Slap up a window treatment and that baby looks like it's always been there.
But, I did go with wood. Simply a personal preference.
If you do go w/vinyl and an off-white, maybe you can match that color for the rest of your windows?