Well, I guess I'll jump on the bandwagon here, too! I am also going to recommend N gauge for the same reasons mentioned above. If I were going to do it all over again, I too, would go that route. Since I have a significant investment in HO, though, I figure I should just stay with it. If you only have a little bit of HO equipment, now would be the time to make the switch (as in switching layout-pun intended). The possibilities for what you can do in N gauge are far less restricted than they are with HO.
As for a switching layout, I would recommend going with DCC whether you choose N or HO. With DCC, you have much more control over what your locomotives are doing, and you have the ability to control multiple locomotives easily. DCC allows much greater flexibility when it comes to switching, so I would recommend it highly.
The number one rule of model railroading: have fun!