Hi Ray,
First of all, congratulations on building your first guitar.
I just finished binding my second guitar, so I thought I'd chime in here. Some of the more advanced guys will probably provide better advice, but I'll explain my methodology for what its worth.
The binding size I used was .080" thick by .200" tall. I chose this based on images of guitars I'd found on the internet that I liked, both in proportion and general "artistry"?
Here are a couple of photos of the just completed binding job
As far as what size to rout the ledges, I pretty much used the trial and error method on scrap. It takes a little more time and can be frustrating, but makes the gluing much easier.
Forgot to mention that I used a thickness sander to sand the binding to the appropriate size. If you don't have a thickness sander, you might be able to tape the raw binding material down on a flat surface with double stick tape and manually sand to thickness with a flat block.
You are right in that the thinner binding bends easier! Make sure you get the proportions to your liking.
Good luck,
Pete