trav: you're comparing apples to rhinoceros with tutus.
When people refer to speaker size for guitar amps, they are talking about the common guitar cabinet, in the standard pedals/amp/cabinet arrangement (plus mic, if we're talking a recording). That's what gets you what's commonly known as the electric guitar sound. You want your cabinet to have some size so that it projects in the room nicely, and as well as to make it easily recordable. Fiddling with finding the sweet spot to place a mic on a small speaker is not a pleasant task - just ask Ned.
Modelling takes almost everything into the digital realm. It relies on whatever output amp/speaker you're using to be reasonably full-range (namely but not only: having some treble). And then you have three scenarios:
- If you want to record or practice at low volume, you're best served by studio monitors. Your modelling unit takes care of simulating amp, speaker, cabinet, and mic for you.
- If you want to actually play with a band with modelling, you need a reasonably transparent amp or PA speaker both for volume and, again, for sound projection. Here, you'll want to disable mic modelling as it makes no sense - you want the "in the room" sound, not the recorded one. Optional: disabling cabinet emulation depending on the amp and taste.
- If you want to play a moderate/big gig, just hook your unit directly to the PA with mic emulation on, just like in the studio. Optional: stage amp for yourself.