Jamie - The amount of data being backed up doesn't matter for database
        sizing...it is the number of files.  The Admin Guide chapter
on Managing the Database and Recovery log guides sizing.

The database is a database: it doesn't "clear itself of unused space".
Files expire according to your retention rules, and then Expire Inventory
is run to release the space.

As to database backup frequency: Do it no less frequently than you would
want in facing a recovery, as in having to deal with full vs. incremental
backups, and observing the size of your Recovery Log in holding info
between such backups.  You can set a DBBackuptrigger, but you really don't
want to hit those as they are disruptive.

All this stuff is covered in the Admin Guide, which is a must-read for
administrators.  And don't overlook the excellent redbooks.

   Richard Sims, BU