SMD size 0805 vs 1206
I think that you are not gaining a lot oft space using 0805. Of course it's depend on the size of your circuit. if it'really big board then may be.
For the power 1206(1/4W), 0805(1/8W). if accuracy in design is well done just check for Rpower =(3/2)*PowerCalculate. Must of time it's really enough to be 150%. some people choose 200% of the power dissipation.
If you are doing Hand Soldering, i suggest your board is not as big as many as i saw in my live. this say that 1206 can be good if you haven't good experience in SMD soldering. For information companies must of time are using  0603 (other 0805) . There are the must use for standard board. For PCB with BGA they go for 0402 because of board size constraint and routing complexity. 
About prices. I think there are no price fixed for any component. There are many companies that make component, and sometime can be different by companies.