Class size affects which activities you chose to do with your group, how many heads you will be able to put together for brainstorming, and how much group speaking (as opposed to pairwork) you can do. There is lots of talk about reducing class size in the US in public schools; while the average number of students in a language class tends to be smaller anyway, I don’t necessarily think that a smaller group is necessarily better.
I personally prefer a group with eight to twelve people. This number means that students can work in a number of different pairs — so they can get the opinions of (and listening practice with) several people to keep things interesting. It means that team vocabulary or grammar competitions are possible and there is usually the potential for balanced teams (more so anyway than with a smaller group).
Some activities — and I’ve got many from the Intermediate or Advanced Communication Games in mind — are literally designed for fifteen or more students, with roles and whatnot, so they are almost impossible to do with much smaller groups.
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Students often say they like smaller groups — many like to speak as a class and of course realize that if sixteen people are having a thirty minute discussion, each one should get to speak for two minutes or less if things are kept even, whereas if three people have a thirty minute discussion, each one gets ten minutes. Many students prefer to speak with the teacher — in part perhaps to hear a native speaker talk, but also because they feel the teacher can correct them. They may not realize that if four (or six or eight) people speak in pairs for thirty minutes, each one gets fifteen minutes of speaking time. I also personally find it easier to correct students (at a later point) or make note of how well they have mastered the language we’ve studied when I am not personally involved in the conversation and needing to think about the meaning of what they are saying, how I will answer, what I will ask next, and whether everyone is getting about equal speaking time.
The smaller the group though, the easier to adapt the lesson towards what they want. And after a certain point — just when depends on you, the students, and the size of the room — a group can become unwieldy.