If you read novels without pictures 5 inch screen is plenty. I used to read with 3.5 and 4 inch palm devices and it worked just fine. Now I moved to 5 inch mainly because there is no smaller e-ink devices.
I don't think any ebook is that good for listening audiobooks. They are big and fragile compared to real mp3 players. It would be pretty awkward to listen when you do anything else. At least for me audio is when I am walking, driving, cleaning, washing dishes etc.
