3" is a good sized square in my mind. I don't see using a 3" in minis unless you plan on cutting them down more.
While 500 sounds like a lot of squares, once sewn into blocks you won't have enough to make anything much bigger than a crib quilt, wall hanging or a table runner and matching placemats, unless, of course you combine them with other scraps and stash. You can make 55 9 patch blocks that will make an unfinished 8" block (you will have a few squares left over), a trip around the world type setting or just sew them together randomly. If you draw a diagonal line across the back of half of them, match them up with another square with no line drawn, right sides together, and sew a 1/4 away on either side of the diagonal and cut on your drawn line you will end up with a bunch of 2" unfinished HST (roughly). Then your design possiblities are endless.