Take talent. Or size, of course.
Undersized talent is always a better choice than talentless size. If you can only have one, take talent.
I'd take a flyer on someone like Melo, Steimsma, Fat Kid Perkins, or another 7' big, in most cases, over an undersized player of average ability, e.g. your Ryan Gomes/Eric Williams-type guy, unless we were desperate for bodies or needed someone to pan out quickly.
The problem is when an obsession with size leads you take someone like Fab Melo instead of the next Kenneth Faried.
Or a player that will be "developing" throughout his rookie contract, then bolt in FA.
We were lucky to have Perk for a couple of decent years; the first few, he didn't play or sucked. He was only considered a solid piece after proving himself next to KG in 08, then again in 09, both on a reasonable contract extension he signed early on, when he was still "developing" because he chose security over a possible future payday. It wasn't long after that when he became an overpriced contract, paid out in part because he's a center. If he had gone all-in for the biggest possible payday, the whole structure of the roster may have been different; he either would've been gone, or taking up a bigger piece of the cap.
But in the draft, take either talent or size, but NEVER just draft for need, e.g. to fill a position.
Or just for size; that's how you get Kwame Brown and Kandi drafted #1, and Darko over DWade, Melo, etc.
But when taking the best talent, if the size deficiency for position relegates them to career bench player, e.g. Gomes or Nate Robinson or whoever, I'd still take a flier on the project big.