I've played with a 4.3" Galaxy S2 recently (I have a 3.2" phone right now), and I it didn't feel large at all to me. It seemed pretty normal. I could probably go for one that is a bit bigger than that.

Also the "theory" that everything above 3.5" is too big for one-handed actions is completely untrue. I have average hands, and I could easily use the GS2 with one hand, even up to the top.

is there anyway to take that default google search bar off the homescreens or does it just stay on all the time?

Try Apex Launcher. https://play.google.com/store/apps/details?id=com.anddoes.la...

It seems to be based on the standard launcher, but allows you to customize a lot of things, including the search widget.

It is nothing more than a widget and can be removed at will.

EDIT: Whoops misunderstood the question and gave a completely wrong answer. See replies.

No. You can remove (with a bit of fiddling) it but to my knowledge you can't reclaim the space it takes (even if you could it would present other issues since it is much smaller than a 1-height widget).

How to remove it (not without complications): http://www.addictivetips.com/mobile/how-to-disable-hide-goog...

You can indeed reclaim the space with, for example, Nova Launcher. My home screen has 5 rows, as a result, and no spacing issues or anything.

Actually it is not, it is persistent and cannot be removed unless you use an alternate home screen replacement (like Nova Launcher). There is also a widget that you can place anywhere.