Go with normal. Healing items price is really low, you have the EP ability "Curaga", there are tons of restaurants in which you can restore healt almost for free and even in the few dungeons I've visited there were means to heal yourself. I can say the beginning of the game can be challenging, especially in some areas at night that have an almost unresonable spawn-rate of pretty strong monsters (they stiil can be easily avoided if you want). Personally after completing the first main quest I rarely had troubles, there are simply tons of overpowered garbs that you can obtain easily and early on. The game is still moderately challening though.
Maybe I'll write something more complete tomorrow, but I'm definitely enjoing the combat system and the costumization (even if I have a feeling there are a lot of "filler" garbs that you'll rarely use in the end, while I'd have preferred a wider array of weapons and shields). Trying to do most quests available in a day is fun, even if the quests themselves are the worst kind of fetch quests. They're still tollerable...but I find myself skipping the dialogues because the exposition is simply unbereable, I'm fine with reading the short tibits that you get when accepting the quest, but I can't endure 5 minutes of terribad voice acting every time I have to bring 7 tails of something to random npc #25. "Main" story is almost inexistent so far, but it's still bad. BAD.
I'm finding myself wanting to play the game more than I could have imagined, even recognizing all the issues (and there are a lot). It's an interesting experiment, definitely weaker than FFXIII and XIII-2, but at the same time the battle system and garb customization are its saving grace.