Get the best machine you can afford and from a local dealer. That way you will get lessons too, very important! Yes, I agree that the minimum hoop size is 5x7. Most designs can be done this size and some larger. Very few are smaller.
I have two machines, both BabyLock and they are great. I got the first one as a pre-owned to see if I would like it and then bought the Ellegante several years later. Wow, what a wonderful machine even if it is pricy :-P