Ehhhh. I've never been a fan of huge, hundreds of ship battles. Maybe it's the old school Trek in me, but I like the idea of 12-20 "capital ships" that have names and some support ships with them. It feels more immersive to me.
That would be plenty sufficient for me as well, and would "feel" about right for ISG's scale. However, the game seems to be designed so that even battles of that size aren't possible, or at least worthwhile.
As
Anguille pointed out, ships take longer to build than they (probably) should. And if you *are* able to build a fleet that large (and in a reasonable amount of time), then odds are very small that anyone else is capable of challenging you anyway.
As a point of comparison/contrast: If you look at how fleets & battles scale in Birth of the Federation (which has even smaller map sizes, unless you're playing with mods), they're consistently -- and satisfyingly -- bigger. Larger battles often involve 50-100 ships, with exceptionally large battles involving more than 200 (although these are rare in my experience). Granted, those really big battles can be a pain (if only because of the turn times and frame-rates), but at least they "feel" like proper battles, generally speaking.
Heck, even most smaller battles in BOTF are equivalent to "large" battles in ISG -- and they're often fun, too. Can your under-strength squadron of 6-7 destroyers drive off or destroy the enemy's 2-3 cruisers? Those skirmishes can be wonderfully tense (and a real test of opposing tactics), with the outcome often riding on a knife's edge until the last couple turns.
I'm not getting any of that with ISG's combat, and it's frustrating. And a big reason why -- as I've come to realize -- is that in its current iteration, the game just doesn't seem to be designed for even moderately-sized battles. By the time those would be possible, you've probably won (or lost) already.