With a larger home there's the ability to section areas off for specific things, be it a den, a playroom or an office. With a smaller home things have to multitask which can lead to areas simply not being as efficient, having lived in both I greatly appreciate the extra space.
Yes, I think the more room the better. I think if you can find a big house and can afford it then its allot better than a small one. I feel that you have more room and space to gather and put things inside of. I feel that your piece of mind can be found in big homes.
No living in a staged home is not that much better than living in a small home. In a small home you have the chance and the opportunity to design it and decorate it how ever you want to. You can personalize it hang pictures on the walls. You can even have pets if you want to.
I don't think one can accurately say which one is better or worse because so many other things go into it than just the size of the home. I would rather live in a small home and have a lot of land than a large home but live on a postage stamp sized lot.