Now at IDE 1.0.5, should I upgrade to 1.0.6 or 1.5.7 Beta for Pro mini and ATMega2560 use?
I have had trouble with 1.5.7 (Beta), so I would stick with 1.0.6. As for code space, you might want to look into Atmel Studio (Free), which uses a Visual Studio shell as the IDE. It blows the Arduino IDE out-of-water. Atmel is the maker of all the AT chips, so the Atmel Studio IDE is a great IDE for writing AVR code. Lots of tutorials online and there is a Arduino plug in called Visual Micro (Free also).