I really enjoy paper piecing projects. I think yours is very nice and I like the whimsey of the houses. I think I would consider white for the border. I think your idea of 2 inches is a good proportion. I would use scraps of the fabrics you used to make a multi-colored binding. Just cut them on the diagonal and use varied lengths. When I have done this, I work by pinning the binding on the the picture as I go so that I don't hit a corner with a seam in the binding-that creates a "problem". As for quilting, I would keep it simple such as an echo around each of the major elements in each square. Please show us us your quilt when you finish it.