yes, raise intelligence to at least 40 if human. that will given a comfortable ammount of mana for most needs. you will also want to think about utilizing lower mana costs into your equipment, as it will give you greater usage with your mana (at max LMC you can cast 7 close wounds with 40 mana in a row, while with no LMC you can cast 4 in the same ammount of time)
human vs elf is interesting, and depends on your character's template and style. i would go human if you have healing, and use paladin abilities sparringly. This would allow you to use weapon moves at a lower cost more often.
i would go elf if you are reliant on chivalry for healing & curing, or you find yourself using paladin abilities a lot. the extra upfront mana helps greatly. elf is also the way to go if you utilize bushido also, as you can use special moves at discount cost, and the extra mana lets you utilize both bushido, chivalry, & weapon specials.
also all of my paladins are human, as i find the jack of all trades abilities invaluable for roleplaying along with overall effectiveness.