Location or Size? in real estate

What is more important location or size?
I would say location. 
It is not a coincidence that you enjoy your neighbors.  Your children attend the same school.  What appeals to you: the park across the street, the grocery store around the corner, the dog park within walking distance, the proximity to downtown or mainstreet, how far the drive is to the mountain, the river, camping, or to the beach, is also what appeals to your neighbors.  Your values are similar.  The houses in the neighborhood typically are around the same asking price which means most of your neighbors make the same amount of money that you do, have the same saving and spending styles, also reflected in your lifestyle.  Find a location where this is true.  The Fourth of July and Memorial Day, and neighborhood summer BB-Qs will be that much more enjoyable. 
Sometimes neighborhoods turnover.  Elementary/Preschool age become highschool and off to college.  The empty nesters move out, new families move in.  Ask your realtor about recent turnover and what type of families: newlyweds, new families, or emptynesters, are moving in.  Tour the local elementary school and health club.  That will give you an idea of the types of families in the neighborhood and whether you envision yourself living among them.  A house is more than a house.  It is part of a neighborhood, and in most cases,also, an association, a community. 
As far as I am concerned, pick out the size you are comfortable cleaning.  If you are gone working most of the day and only sleep at home, the smaller the better.  If you work from home or often entertain, the house will need to reflect that.  Think about what rooms your family gathers in; those rooms will need to be bigger.  If all the people in your family enjoy his/her privacy, then you focus on large bedrooms.  If your sanctuary is the tub and closet (like me), then the master bath will be what you consider top priority.   If dinner is when you all come together, cook, eat and clean, then the kitchen and dining room will be important. The size also should reflect your values. 
Location and size of the real estate you are considering purchasing should both reflect you and your family's priorities, but if I had to pick one, location is more important.  Once moved in, you can always hire a contractor, changing your neighbors is harder.