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1:18 scale is about the smallest you can get a figure with high detail and great articulation.
Anything smaller and you start losing poseability. Detail remains about the same for another inch, but paint suffers a lot.
1:18 scale is also best scale, because there's a shit ton of everything to be found that's compartible with the scale. However, if you want anything of quality, you're going to pay out the nose considering its size. There's very little mass market 1:18 figures now, so prices tend to be high. A high quality 4" figure will run you about $30+ now. Standard quality (like a GI Joe) is roughly $20-25.