It would seem as though you already have a decent idea of the pros and cons involved regarding roster size...
consequently, these opinions should be brought up within your group of 8 and voted upon to see what best suits your league.
I am involved in an 8 team home grown league that starts 12 slots each week with a roster size of 20 and 2 additional injured reserve spots. Last year, we had 161 waiver transactions, 12 trades....and multiple use of the IR option (which also costs money). The monies generated from those alone doubled our pot by years end.
***A clear conscience is only a clear sign of a horrible memory***