Always better to go bigger if possible in S, especially if its your first SW
tank. More water = a more forgiving tank for parameters. Small tank params can fluctuate fast and you need to be on top of it.
Tap water has too many heavy metals and other chemicals that make it not suited well for SW
without a good effort to eliminate them (such as let the water sit for an extended time and such). If you use tap you will most likely be fighting an uphill battle against algae continually. And if it just fish that's one thing but inevitability you will want corals and inverts which are sensitive to stuff in tap water.