If you were setting up an encryption-based network, what key size would you choose and why

If you were setting up and encryption based network, you should employ 128-bit key and do not go with less because of the lack of security. The smaller the number the easier it is to crack and choose the largest key size consistent with the tools being used and the overhead performance burden it would impose on the environment. The current "gold standard" is to ensure that all computing device are capable of AES 256 bit encryption. It is not advisable to go with too large of a number so that it for some in-foreseeable reason something happened to cause to misplace the key or it becomes corrupted.