Personally I"d def choose option B, as had more fun in this format, than the large sized regional teams that took place.
I don"t see any reason why numbers would be hit either, if a regional side is struggling and not going anywhere people would more than likely just stop playing, where you"d feel more keen to carry on playing in a smaller team with friends / family.
It would be necessary to also have a player market for those that may struggle getting 4 - 6 players, so noone is getting excluded. You could also have an option for new people to join your sides if they wished, during the cause of the campaign.
Overall a smaller team format is far mor equally balanced. One region has 20 players, one has 10. Doesn"t seem fair. Only way to stop that is by limiting number of people per region, but then you"re driving players away. With a smaller team format this wouldn"t be an issue. Teams are in an equal footing.
I think with a format of smaller teams also gives you more room to develop the league. Multiple divisions, promotion, relegation etc etc.