Okies, here's a sample e-pub that I've formatted (available via the Baen Free Library) by David Weber, along with a screenshot of how the first page of Chapter 1 looks...
As far as the spacing, you can use the "line-height" tag with calibre to set it - so I might do a base-font-size of 13, and a line-height equal to 11. The problem I saw with doing it this way is a calibre seems to apply line-height specified this way universally - so around the chapter headings, etc, it decreases the line height as well. Instead, I've specified the line-height in html.css, which calibre uses for default values, under the defaults for the paragraph tag. Definitely helps
I think the "smallest" font size is 15pt, but that is the only one I've ever figured out - I've found that setting the line-height at 85-90% of the font size works really well for me, but you can test and see what you think.