You want a dreadnought for maximum volume and power, especially in the bass register. If you are playing with fiddles, mandolins, or those never-to-be-sufficiently-damned tamborines with necks and strings, in an unamplified setting, you probably need a dread or a full jumbo. Unless you can afford a Collings 000-2h. Most flatpick guitarists use dreads because they came out of a bluegrass band setting and the consider that size "normal."

What you call a "folk" size guitar - the 000 size and smaller - usually have better balance across the range, and are more comfortable for people, except tall males with long arms, to play.

I've gotten out of playing dreads in the last few years because they tend to be uncomfortable to play for very long if you're short, or have a little belly on you, or are getting older and not as flexible as you once were. That's three out of three with me.

I'd try the smaller size for your first guitar unless you're going to play a lot in groups with other instruments.

The ideal size, IMO, is the Martin "M" or "0000" - as big as a dread, but narrower in the waste, and a shallower body, so you don't have as far to reach around. But they don't seem to make many of them.

Peter.