My large galleon royal navy is more of a tank, it has more health and more armor but my smaller medium royal navy ship has two 3.5 times attacks while my galleon only has a 3 and a 3.5. My medium ship also has better turning and increased resist and accuracy compared to the galleon. The galleon however has a faster health recovery rate. The medium ship is easier to maneuver, draws less attackers when moving through areas, and can turn on a dime, its attacks are more flamboyant and fun. So which is better? The medium ship is quick and nimble and hits hard and fast, the galleon sustains more damage and recovers faster but has the nasty habbit of drawing more hostile opponents. I switch between them and often end up using the medium royal navy as I do enjoy it a bit more.

I wrote all this out to openly state, this is how ship differences should be, no real advantage between them but instead they should excel at different things. The larger ones should be more like tanks, but draw attention. The medium ones should be more like swashbucklers than privateers or bucaneers, and the small ones should be able to avoid ships easier and scoot away or join in as support without drawing as much aggression.

I think all ship types should be upgradeable to handle any world they enter, but each ship type should have its own advantages and quirks.

I agree 100% that all ships (maybe not the raft) should be useable (capable in battle) in all areas, and that they should be upgradeable throughout the game. I also agree that each ship style and level (class and size) should have its own benefits and drawbacks. This would allow players to customize their style of play to suite them.

While your discussing what seems to be ships stats vs ship looks to some degree (ie Size), keep in mind that we had been told in early beta that they were planning on implementing some form of ship/ship equipment stitching as well as the gear we wear. No idea how that will work if it comes to be, but it will open up a world of alternatives noone has even though of yet.
I love my Marleybone galleon, and with experience in ship manuevers in the game, I have no problem, I avoid traffic issues using observation, skill, and strategy. My big galleon can fight multiples ships at a time.. smaller ships struggle here. When it comes to attacks that multiply damage there are other factors involved, the base damage the ship its on has for one, and accuracy plays a HUGE role in ship battles.
Then there is a matter of realism. Size isnt everything, frigate warships generally take and deal more damage than most galleons in days of old. Frigates were built for war, making them in reality the "tanks" of the sea, whereas galleons although armed for protection had other applications such as transportation of goods. Further in reality, we all know that what works best depends on the job at hand, but so far in Pirate101, ever since beta started... bigger is better.