The need for seating is something only you can determine. If you want it you must make sure that there's room for peoples' knees. A 12 inch overhang might be good for a stand-up area but it doesn't work for seating. 15 to 18 inches is recommended esp. if you're tall.

Why not do 18" deep cabinets and 18" for overhang.

12 is fine for seating. There is optimal and there is 'fine.' Ours is 12" - it works fine.

Do you need seating or storage? That is the question and the answer will tell you what your island should look like.

For me (me, not you) I get frustrated when the island doesn't have seating. I like the social aspect of the kitchen island. However, it sounds like you have a small space, so if storage is important, do it.