Small is a negative, all else being equal. Growth is good, but not if it is too fast (issuers can overleverage themselves during torrid growth assuming that they will grow into it and its ugly when the music stops).
As for single issuer limits, I tend to think of percentages of total for exposure and pay attention to correlated issuers. You would probably allow a very high % of total to be state GO bonds if you are comfy with the state's credit profile, but for a municipality or other entity you might want to keep exposure to 10% or less, with something in between for bigger, stronger entities that are not the state.
The corelation issue can be a little tricky and requires thought. I would not want to buy lots of bonds from two municipalities that are right next to eash other because what hurts one will probably hurt the other and your cumulative exposure to bad things could be much bigger than an individual position would suggest. OTOH, in my home state I would willing buy bonds issued by Atlantic City (since they can milk the casinos forever) and by Monmouth County (growing suburban area with no connection to AC) and not worry about the two getting hammered by the same event.
I should alos note that what I am describing is the way to do this if you are being ultra careful and looking to preserve capital. I regularly ignore all the above advice in my bond portfolio (mostly corporates) when I see opportunities for very high returns from doing so. But what I would do is inapropriate for someone looking for a CD equivalent.