Jim Teeple,
As mentioned above 3 ft gauge was most common in the USA for common carrier RRs and logging RRs. 24 inch gauge, and 30 inch gauge appeared some what in industrial applications and of course the Maine "2-footers".
So if you want to follow one of the more well known logging prototypes, select ON3. However, if you do this you will do more building and you will have to search a little harder to find equipment. But that is part of the fun for most people.
On the other hand, if you use ON30, you can track down Bachman's T-boiler Shay, Climax, and I think also a heisler. Wiseman I think makes a body to modernize the shay. T-boilers are very old prototypes.
As for the difference - to be technical -between ON3 and ON30 - it is only the track gauge. They are both O Scale and both represent prototypes to 1:48 scale. the cars and equipment appear smaller because the prototypes were smaller - much smaller in many cases. They are narrow gauge running on track about 3/4 as wide as standard. Most Narrow gauge freight cars did not exceed 30 feet long, which would be 7 1/2 inches. The cars will and should look wider sitting on the HO size track. Narrow gauge stuff tends to have a noticable overhang compared to standard gauge.
And to properly model in ON30, you should not use HO track. the track gauge is right, and the stuff will run fine, but the appearance is all wrong. The TIES on HO track are made to look like ties on standard gauge while the ties on ON30 (or ON3) need to be O Scale size timbers - ie much larger. And then narrow gauge track was not built to such heavy standards, so the ties need to be spaced farther apart.
There are modelers who buy bachman ON30 equupment and switch the trucks and/or wheelsets to ON3.
As for space, both ON30 and ON3 would probably require the same space for the same equipment. ON30 is just a compromise because Bachmann originally wanted to market something for Christmas Tree villages and have access to track easily.
By the way there were many standard gauge logging RRs too.
