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What is the recommended size for standard infantry models? 1" or 1.5"? If it's 1" I'd imagine the 1.5 would be for terminators, etc.

My Necrons are in 1" and they have a little bit of space so they aren't rubbing on the bottom of the tray on top of them.

1" is the best for standard infantry models, yeah. 1.5"-2" is good for Terminator sized infantry. Just measure the base size of models if you're ever wondering if they'll fit.

I use 1.5" for my suarus troops as they are just slightly too big for a 1" IMO.

You might actually fit in more if you go for 2" trays and have the models standing up.

Depending on the models, I use 2 or 2.5 inch trays and all my models stand upright, so that they do not rub their paint jobs off on the foam.
The exceptions to this are my SM Scouts. and Ork Grot herds. I lay them down flat in 1" trays.

Eric