As Camaro says, go for as big as you can afford.
Temperature, Alkalinity, PH, SG, all fluctuate less/more slowly in a larger tank, and swift fluctuations may kill the fish.
Would say get some books and read up a bit too, I say get some books as I have three and each disagrees with the other on some things...
Damsels are very aggressive fish, and though they may survive the cycle, is it fair to stress them firstly, and secondly they may relentlessly pursue/attack any newcomers, so not a method I feel is great. Fishless cycling may take a little longer but is worth it IMHO.
The lighting it would be good if you can get a 10k light (many use Metal Halides) and an actinic (Blue) which will light up an hour before the 10k light and cause less stress to the fish.
The filter I am afraid I have no idea about, but I would guess if the tank is sold as suitable for SW then it would do the job. Just need to let it mature nicely, and of course in SW many people have some Maxijets to get better water circulation, especially at the surface.
Good luck.