I think that boiling as much as you can improves the beer. If you can boil 3, 4, 5 gallons, or as much as you can, it seems to have a "cleaner", less "cooked extract" taste to the finished beer. It has to do with maillard reactions (similar to caramelization reactions), with darkening in color and changing the flavor.
Many kits advise to boil 2.5 gallons and later top up because many people just don't have the stove or burner or a big pot to boil up all of the wort at once.
One thing that is something to think about is that it's harder to cool 5 gallons of boiling wort than 2.5 gallons, so a way to cool the wort is something to think about when doing a full boil.