I finished the game on "loose cannon" difficulty. I chose it mainly because I didn't like the idea of a gun with unlimited ammo, it sounded "too easy". It was quite tough at the start, the first level being already quite large, with no tutorial or training mission to ease you into the action. The control took some getting used to, just as the maze-like nature of the levels; but later on, after acquiring powerful weapons, battery, shield etc. it became much easier, save for some very frustrating points. The difficulty, however, ramped up in the last couple of missions. To be honest I never had problems with ammo; indeed, towards the end I almost felt like the game was throwing at me clips, cells, medikits etc. I had to leave many of them on the ground because I was already full.
Of course you have to save very often, almost continually in fact.
I'm certainly looking forward to playing the sequel in due time.