People ask this question all the time and I find it annoying. If you have a great salary efficient team and set prices well, you can do great with the minimum default arena. If you suck, no arena will be large enough to save you.
Really, larger is better. It's as simple as that.
I think this has the thought process on this nailed. There needs to be as much focus on making sure the ticket prices are adjusted intelligently as there is on the size of the arena, but the "larger is better" is probably the best answer. One addition I'd make is that piling on a ton of bleacher seats and neglecting the other sections can come back to bite a team once the promotion bonus wears off, especially if they manage to stick around but not thrive for a few seasons.
The only other thing I can add is that unless you're planning on never advancing past III, there needs to be some sort of plan toward getting an arena that's capable for II and then for I. That becomes harder the more remedial building you have to do to address an undersized arena - and extra money for arena building is easier to set aside the lower down you are in the league structure.