It’s not a question about it being a full fledged DAW. It’s a question about if the (sketch) recordings are of sufficient technical quality to be used as the basis of further recording. 16-bit IS NOT!
Crabman, we’re talking about recording here, not mixing. Even with digital, there is a slight deterioration of the source material every time you do something to it (mixing, adding FX, adding EQ, etc), except perhaps is you work in 32-bit FP which, I believe, is Cubase’s internal bit-depth. That is why nobody, but ignorant amateurs, records in 16-bit any more. If you record in 16-bit, you can expect your final result to be equivalent to 14 or even 12 bit.
24-bit or 32-bit FP is necessary if the recordings made in Cubasis are to be used in a professional Cubase project!
Mixing to 16-bit is fine (mixing to 14 or 12-bit is not) since that is the bit-depth of most consumer formats (there are of cause others).