I have my straight stitch machine and serger, and find I rarely need to use my embroidery machine for anything other than emboridery. And when I do, it's not that big of a deal to convert it. The hard part is finding a large enough open space to put the embroidery arm (my machine has a large hoop).
I've found my favorite hoop is my 9x9. I can honestly say that I have yet to do any project that would have fit in a 4x4 hoop. I've not made any labels yet, I do them with permanent ink so far. Though I did make a purchase of super fine thread (60 wt) that was designed specifically for use with delicate or small work (IE small letters). I saw samples of the same work done this read and more "normal" weight and the letters were so much clearer.
I also believe in "buy once, cry once". Meaning stretch a little bit to start to get more, because it will only cost more money (and more crying) in the long run if you cheap out to start with ( and I do mean that -when you decide to go cheaper for cheaper's sake - not because you really can not spend more).