With 2 students, each student has to be involved. There is no way to sit back and watch the others. The problem is that this creates many small groups in a class, so I need more assistants to help me help the groups, and I end up going over the same answers many times for many small groups. A group of 4 can work in pairs. There are enough ideas and yet everyone has a chance to talk.
Larger groups have more trouble finding times to meet.
With an odd number, one person is usually left out. I can't really answer this question. The appropriate group size is very dependent on the task. Because of the small nature of the projects and the students' lack of experience with cooperative learning I believe that at most 3 students should be in a group. It depends on the class.