Larger propellers will generally give greater efficiency (depending upon design). However there is one important factor to consider when choosing your prop size, and that is torque roll.
A larger diameter propeller will produce a larger torque moment than a small one, thus increasing the tendency for the sub to want to spin in the opposing direction.
How bad this affects the boat is depndant on the static stability of the boats design and the RPM of the prop.
This is why a lot of boats use counter-rotating props, to balance the torque effect.
Also bear in mind that a bigger prop will need lower revs, which means either sourcing a low revving/high torque motor or using gear/belt reduction with a higher revving model.
Personally, I'd go with the smaller prop- it'll give you a lot less hassle, and any efficiency lost will be insignificant, IMHO.