Head space isn't an issue in Primary. I use my 6.5 gal carboy for 5 gallon batches. You need the room for Krausen (mostly in beer) and yes, the CO2 will blanket the must/wort. I also make 2 gallon batches in 5 gal carboys and 1 gallon batches in 3 gallon carboys sometimes.
Secondary is where you have to worry about headspace and top up if necessary. If you transfer before the bulk of the fermentation is complete you can get away with a little headspace in secondary.