Differences between small vs. large mid driver

No driver over about 4" is capable of upper midrange frequencies without cone breakup. (Breakup means that different parts of the cone are vibrating differently instead of moving as a rigid piston). Cone breakup is not a complete disaster, but tends to produce irregular frequency response, often compensated (sort of) by components in the crossover network.

The generalization of expensive speakers using smaller midrange drivers is not at all true, Andy2. Look at Coincident, Dynaudio, JMlabs, Merlin, Wilson, and a whole raft of others using 6" - 8" midrange drivers. Speaker designs are as disparate as the people who purchase them. There are small midranged speakers, large midranged speakers, planars, electrostatics, horns, single driver, etc.

I also think that a 6.5" midrange is the "nominal" size, with a 5.25" coming in second place. 7" - 8" is large, and personally (probably not most audiophiles, though) think a 5.25 is on the small side. You are definitely correct about 3" - 4" being small, and I will add Avalon, Thiel, and Vandersteen to your list who build speakers with this sized midrange.

Like everything in life, there are tradeoffs to small, medium, or large midrange drivers. Larger ones can produce lower frequencies, and can go all the way down to the midbass. They can also play louder in many instances. Smaller ones can play at higher frequencies - into the treble. A 6.5" is a good compromise, as it can go pretty deep into both territories.

Notice that most of the speakers (Totem excepted) that use a smaller midrange driver are at least 3 way speakers. A two way will need a more sizable midrange driver to ensure it goes down far enough into the bass to recreate a satisfying musical experience. A lot of it comes down to the speaker builder's priorities, and his ideas on keeping the crucial crossover region out of a certain area, be it the low or high midrange.

Which is better? The real answer is neither. I hope I have made the point that great speakers can come in a variety of flavors. The ultimate answer, like most things audio, comes down to personal tastes. Close your eyes, if the speaker sounds good, it is good. Regardless of what design choices were made.

Andy, it'd be easy to write a book about this, and I'm 2-finger typer on a damned French keyboard on vacation in Grenoble, so I gotta keep it short...plus I'm not the expert here.
Driver diameter is chosen to balance many needs. Generally, the larger the driver (and motor), the lower the passband, the narrower the dispersion at higher frequencies.
Simply, it gets hard to mate an 8" driver with a 1" tweeter, as there passbands barely intersevt smoothly, and off-axis response usually suffers from excessive "flare".
It follows that the necessary low crossover for such a design risks overpowering the more fragile tweeter's motor.
Rare is the 8+1 that sounds great (I do remember a Genelec pro monitor that was pretty impressive, but again probably intended as a console on-axis monitor rather than normal room use.), but it's a cheap way to get a lot of bass, generally as a trade-off with smooth midrange.
Smaller mids have smoother upper freq response, so usually will result in better blends with tweeters, sometimes allowing the crossover freq to be pushed WAY up, thereby reducing all sorts of crossover response crap in the critical midband. (B&W crosses the Nautili at 4k, but not to my personal liking; Verity Audio uses such a fine mid that they don't cross it until way up at 5500Hz! The "coherence" is phenomenal, as a result...but I digress.)
Since small mids don't work too efficiently down low a designer has to decide whether to boost the bottom with a vented or very large enclosure, or of course simply design the speaker with limited bass. The former may work very well within its dynamic range, the latter may benefit from boundary support or of course a subwoofer. The obvious rejoinder is to add a third driver for bass response, taking the load off the mid, and thus allowing a smaller mid that blends better with the tweeter.
In practice one sees a lot of 5" and 6.5"ish +1" monitors. GENERALLY the larger ones are punchier, having greater dynamic capability, and a more open sound. Many 5" mids sound pinched to me, with a "cupped" coloration. In my own work with an 8+5+0.75 three way I couldn't quite get the lower mids to sound as natural as with my 6.5+1, for example. Of course many designers DO have tremendously successful designs with 4-5" mids, as the physics postulates that size range as most appropriate for the female voice, for example.
Designing ANY three-way design gets much trickier in practice, despite the easy passband summations of 8-10" + 4-6" + 1"...but this is a big subject.
You noticed an inverse correlation between midrange size and price. This is a personal idiosyncracy, and perhaps the result of comparing a well-honed smaller design using a great midrange driver vs a larger design using a cheaper "mid-bass" driver. I dunno. The popularity of 6-7" + 1" two-ways indicates the success of balancing fine, well-balanced response and cost. Since it's a bit easier to improve upon the critical midband with a smaller driver, a designer will (almost) necessarily give up bass response to achieve this holy grail...sometimes the results command a higher price, even though the driver is smaller. There are too many other factors involved, some of which I hope I shed a bit of light on. A bientot. Ern

Good discourse in this thread!

My Coincidents are a GREAT speaker, using an 8" Seas P21 Excel, with a 1.25" ScanSpeak Revelator. The midwoofer's phase plug helps extend the driver's upper frequency performance and address the point Ernie brings up regarding the difficulty in implementing this. The 10" Peerless driver in the integral sub makes sure the speakers go all the way down. There is no crossover between the 8" and the 10", although the 10" does have a cap and a coil to roll it off.

The Fried speakers we're building have the new, outstanding 6.5" Vifa. The Monitors are a two way, and the Studios are a three way, which include the 8" version of this driver. The previous version of the Studios used a Peerless 5.25" midrange (and it's 8" counterpart), but I can assure you this is a MUCH better sounding speaker, in a smaller, more attractive cabinet.

Wait a minute! a "Midrange" driver, by definition lives in a three-way system (at least). The 6 and 7 inch drivers in two-way systems are not midrange drivers, although they do need to pinch-hit for the missing driver. Even the best 7-inch drivers develop ripples in their response starting around 1500 Hz, and tweeter performance is compromised if you cross it over that low.

A midrange driver covers the range from about 600 Hz to 3000 Hz.