Jon;
Ok – MY opinion. Others will disagree, of course.
I like 3-1/2. Reasons:
– strong enough to pull a couple of people;
– light enough to move; easier than a larger gauge locomotive;
– over here (Ontario, Canada) our club uses 5" gauge, but the norm is 4-3/4, so that's a bit of a "bummer", as one can not visit other clubs. You'll not have this issue, of course.
– elevated tracks, if you have it, are fine for either gauge, as reaching into the cab is then easy.
– ground level running – both are not nearly as convenient as larger gauges (7-1/4, etc)
– parts are smaller and easier to man-handle, and machine on a given machine.
– Just finished a 3-1/2" gauge Shay locomotive to Kozo Hiraoka plans – no castings! Beautiful plans….
——-
Now, I do understand that many think bigger is better, and that I'm an odd-ball here. I do like running larger steam locomotives, but have decided that me building one is not in the picture.
I'd hazard to guess that the trend in North America is 7-1/2" (not a typo) gauge, and "diesel" outline, so steam is on its' way out.
I have a 3-1/2" gauge locomotive in our living room; on a bookcase, under a plexiglass top. If it was 7-1/4, it would be twice as long, twice as wide, twice as high, so would most certainly NOT be in our living room! Neither would the same model in 5" gauge – smaller than in 7-1/4, but still too big.
You have to decide what you want, nobody else can do that for you. Whatever you decide, it'll be the right decision.
John.