I have two embroidery machines and I can honestly say that my 4"hoop is used seldom on either machine. I use my 5x7 all the time and my biggest one, 7x12 next.
You just want to do labels, until you find out how much fun embroidery is and you want to do more and more! Many of my labels need the 5x7 hoop.
I'd get the one with the biggest hoop size in your price range.....you won't be sorry.