As long as the betta is taken care of, I don't see a problem with small tanks...unless of course it's TINY like they can barely move, and I wouldn't want to put a king or a giant in a small tank either.
If you think about it, anything is better than the tiny, filthy, cold cups that they are kept in, and you are giving them a MUCH better life either way...
I have two bowls, each almost 2 gallons. I keep a small DTPK male in one (planted) and a female in the other (not planted). The male plakat had a HUGE chunk out of his fins that went almost to his body, and within just a few weeks it was completely gone, and he builds very large bubble nests all the time. This is just more proof that they can be just fine in smaller "tanks," depending on the situation.
(The only pictures I have of the male in his bowl are from a week or two after we first got him, so the chunk out of his fin is still pretty large. It's completely healed beautifully now. You can't even tell it was there in the first place)
#1: His first (tiny) bubble nest
Yet another bubble nest...at one time, he had three different nests in his bowl O_o all built at separate times...one a day...lol
Sorry for the picture overload!
Btw, I really like this thread