Someone once said to me "You can do small work on a big lathe, but you can't do big work on a small lathe".
Marvellous work has been done by folk on a small lathe, bigger than the designers ever imagined. (See what has been done on Myford ML7 and Super 7s) BUT
My advice would be to go for the larger lathe. If you need to do small work, you can always use a smaller chuck or collets to hold smaller work.
For the record, my lathe is a far eastern one, of the Warco BH600 / Chester Craftsman family. Not perfect but no insuperable problems over the eleven years that I have had it from new.
A good secondhand lathe, can be a worthwhile purchase. Sometimes, you may have to hunt for accessories, such as Changewheels, or Steadies, but don't disregard secondhand machines that are in good condition.
Do beware of ones that are worn, have been abused, or bodged! Take someone with you who is experienced when you go to look. Your pal will probably also know if the asking price for the lathe and / or accessories is fair.
If not already a member, find your local Model Engineering Club, join and take advice from various members.
There is a WORLD of experience there, and on these Forums. Tap into it! and Good Luck
Howard