Storage wise, IMHO, 1GB. That's about the point you end up with minimum 32K block sizes if I remember correctly.

Though I have absolutely no clue what you mean by "seriously." 32K is pretty damn wasteful if you have a lot of files.

Performance wise, it's a complicated question because System 7 typically runs faster than 8.1 regardless of the file system used. Thus it's hard to say which is faster assuming the same hardware.