Some people are satisfied with the 4in, I rarely use mine and would feel restricted. Not sure on this machine about the cost but if you are only doing labels then this would be fine as far as the hoop size. This is a very addicting habit to get into so if you do I'd either buy an cheap one it'll be fine for now knowing I might get bored and want a larger one in the future. Most of the ones unless dedicated emb machines can sew straight and decorating stitches so it should come with or you can buy the 1/4 in foot. Have you checked Brother's web site, they normally show what they with their machines. If you think you may trade it in in the future I'd consider buying one from a dealer and you'll be more apt to be able to trade it in on your next one. Find stores around you and try out as many as you can to see what features are available and what suits you; we're all different
Just wanted to add and this comes from a Brother dealer, not all Brother machines can use Disney designs on them. This is a misconception by many and then get disappointed after they buy their machines.