If it is just for steeping I will normally stick right around 154-155 degrees. If it is a partial mash recipe the temperature of your mash will affect your wort. If I am not mistaken a fairly middle of the road mash temp for medium body is 154, but I haven't quite gotten into the AG just yet, but I am doing my research!
Yes steep them in the full 5-6 gallons if you are doing a full boil. For a partial mash you would not be mashing in the full 5-6 gallons you would need another pot or a mash tun.
170 degrees is a sparge water temp to stop conversion, if you were to steep your specialty grains at theat temperature you would probably extract some tannins. You could actually steep specialty grains in cold water overnight, steeping grains is similar to making tea.