I’ve tried out some of my Hornby and Bachmann locos on the smallest commercially available curves – Hornby 1st radius (about 15″) and Jouef (about 12 3/4″). The track on the board is not meant to be a layout – it was just two test circuits, and they are too close together for comfort – trains will collide if they overhang the track too much, but I have included both just to give you an idea of their relative size. The board they are on is 3′ x 3’6″. If I were to build a proper layout using these, I would probably go for 3′ x 6′ – it could easily slide under a bed, and I would choose slightly bigger than first radius for the outer oval (I would use flexitrack or 1st radius + very short straights to get the right distances from the Jouef inner oval).
Despite what some people say, there are plenty of locos that can cope with 1st radius, so if you really are stuck for space, go ahead and build a layout with first radius curves. With a decent controller you can get good running with plenty of the latest models from the main manufacturers, as well as having loads of secondhand Tri-ang, Hornby and Lima models available.