I do 5.5 gallon batches in a 7.5 gallon turkey fryer. I always start with 7 gallons- you really really need to keep an eye on it and use some fermcap in the boil. I boil 7 gallons down to 6 in an hour, lose about a half gallon to trub, and end up with 5.5 gallons of clear beer so my kegs are always 100% filled.
I started on BIAB thinking I would go to a traditional 3-vessel setup quick enough, but have never changed. BIAB is just too simple, and produces excellent beers. There's nothing you can't do with BIAB except maybe fly-sparge, but I don't much care for that and imagine it wouldn't be hard to do if you really really wanted to (kind of defeats the purpose of BIAB though, haha). A lot of people start out with the paint strainers, but I just made the switch to the Bed/Bath/Beyond mesh laundry bag- it's way larger so I can mash in the full volume of my BK (which for me means up to 22lbs of grain with a thick mash!!!), sturdier, and has a drawstring. Good stuff. I would say start on BIAB and never look back!