Interesting question. Roaster size is something I wrestle with from time to time. I was actually asked this same question last week. I have owned a 2 kilo and a 10 kilo and I currently roast on a 5 kilo. I have always done wholesale and web sales, never a retail coffee shop. When I ran my previous shop, the first thing I did was to work on getting one healthy account that would use all my coffees and take them weekly. The reason for this was so that I could always roast full batches, no matter the size of my machine (within reason) and not have to worry about wasting coffee. Those 1lb web orders or even local ones can kill you if you don't have a way to sell the "extra."
I got lucky and picked up a grocer who sold a lot of coffee. Before we were done I had 21, 10-15lb bins in two of his stores...42 bins total (He just offered me 44 bins again...but, alas, he is too far away!). He sold a couple hundred pounds a week, so I was constantly roasting and supplying him. I eventually worked up to pushing about 500 lbs a week on a 10 kilo machine. The small orders were never a problem because I was always roasting and selling. In this scenario, the larger the machine the better. Ideal in my mind is a 12 kilo. And I never roasted smaller than capacity batches. Remember, I've been working in manufacturing since 1978; it's very hard for me to not think in terms of economies of scale.
Now that I sold that business and started up again in a very limiting scenario, I face exactly what you are talking about. I get a lot of those 1lb orders. I probably only sell 100-150lbs a month and I toll roast another 100-300 a month. I do this on a 5 kilo US Roaster. 10lbs is max. I can do 5lbs on it with no problem. I can probably do less, but I haven't tried. Seems like a big waste of time in my mind...hard for me to get past the scale mentality. The 5 kilo seems like a good size for what I do now. I can roast reasonably small batches.
However, since I don't want to stay this size and in this situation, I plan on a 12 kilo. I prefer to try to build my business to accommodate a machine that can actually make me money on the wholesale side, as opposed to buying a machine that will let me do 1-5 pounds orders. I'm no expert, but I've done this long enough now to know that on the wholesale side, I can't make any money with those small numbers. I'm just laundering money. If its not making money, I'd just as soon be riding my motorcycle. I can do it on the 5 kilo, but I have also spent a lot of 12 hour days at that machine...not really that fun.
So, if you are retailing, selling at a market, web only, etc, maybe a 3-5 kilo is fine...I'd go 5. But if you plan to wholesale, I say 12 kilo and up.
Shep