Hi FVG - as to the background fabric color, how about a mottled solid? Like these: http://www.hancocks-paducah.com/ItemList--b-41--a-20--search-marbles--s-1.html
And you could use something like Steam-a-Seam 2 for the islands. It's a fusible web that you would fuse to your 'island' fabric, then position it where you want it. You can keep moving it around until you iron it. You could then stitch around the edges , even use some sort of decorative stitch.
I wouldn't go bigger than 36" X 36".
Have fun with it!! :D
sue