Given the choice, I go for "smaller." My idea is a space station consisting of a large habitation module, a truss about a thousand feet long (extra points to the designers if they can make it collapsable for launch), and a big counterweight (if it's all equipment and no habitation, you don't need routine human access up and down the truss). The truss would contain power and other lines, and maybe a balance weight moving along the truss on a track for trim.

Such a system would be heavier, and take more launches than a pure tension tether system, but would have far fewer dynamic problems in orbit. Not "none," but fewer.

Expansion could be done by including a "core" or "hubcab" section in the center of the truss that could be used to dock additional "spokes." This would also be an ideal location for stationkeeping thrusters.