Generators are sized to the actual loads that they are expected to power. With an existing house, the easiest way is to measure the amps you're actually drawing with "everything on," and base your sizing on that.
You don't want to oversize. With generators, "bigger" is NOT better. Talk to your genny rep, but typically you want the generator tom operate at about 85% of its' rated capacity. For the 'normal' house, we're usually talking about a draw of about 70 amps.
Having a larger transfer switch is a good idea; but, again, there's no sense in overdoing things.
The most important thing about a generator instal is that the generator operate reliably. In practice, this means running the generator periodically, under load. There are two ways to do this.
One way is to have the generator turn on automatically, and have the transfer switch let it power the house for, say, an hour each month.
The other way is to add a "load bank" to the generator. A "load bank" is simply a very, very big toaster. The generator powers this load when it is 'exercising,' and does not use the transfer switch to power the house during this period.
