Having seen how well it works in MotoGP, I'm very much in favour of permanent numbers for the drivers.
I suggest that, initially, the Champion gets first pick, then the 2nd place driver and so on down the order. After that, any 1 or 2-digit number should be allowed. I don't think we need to concern ourselves about retiring numbers - it's highly unlikely that any driver brand new to F1 would choose a number associated with a famous driver. The marketing wonks would probably veto it anyway!
There are a couple of bits of "housekeeping" that need to go with it though.
Firstly, unlike MotoGP, the reigning World Champion must display #1 with no option to use his own number during his season as Champion.
Secondly, the size, postion, typeface etc. of the number must be fixed. Being a really old fogey, I would like to see the big black numbers on a white circle of past days. Place them on the rear wing endplates for greatest visibility - I know the teams will scream blue murder about that but stuff 'em
I loved the suggestion of 21 for Vettel. Given his sense of humour and current charm (doughnut) offensive, he probably would go for it - especially if he thought it would wind Mark up a bit more!