I would not go any bigger than 2.5", if you went 3" you would lose any torque you have any it would be way to loud.
As for the muffler, i like both cannons and oval mufflers and actually have an oval muffler on my car at the moment.
A bit of advice though, don't cheap out on the muffler, when i got mine done, i was on a tight budget so i have some no name brand muffler and it sounds like ass. If you want a nice sound get a good quality stainless steel muffler.