Resolutions used on models and acceptable sizes.

[DnALANGE]

Nice explanation there!

In case of using text (computer screen, paper etc.) which need to be readable that can be solved with higher priority on the uv map (larger island/UV) or a separate image of appropriate resolution.

The above is what i ha done and you were right, 1024x1024 for me.
And you could easely see the small letters and the quality was amazing as well in my mod.
The higher the texture size, the better.
BUT if you have too many of high textures the game will easely get framerate drops (lag).
So pick your choice.