I wouldn't mess with the libs generated for cloud endpoints. If it generates 1.16 then that is what endpoints is tested with, and probably what everyone else using endpoints is using. And I believe 1.16 is correct anyway - that's what my projects are using. The fact that it is one version behind (1.17 is current) is not a problem really - the google java client libraries have changed very little over the last few versions.
You can make sure you have the latest GPE (and you probably do since you get notified when updates are available), since this plays a role in endpoints, but like I said, I think 1.16 is correct for endpoints.
If you need Google Java Client Library for your own stuff, in the same project, I would personally stick to that same version - 1.16 - but you don't have to.