Regarding the unit size and the question of having a banner at all:
In our LARP group we were only 10-15 guys and we had our own banner. Even with such a small unit size it was extremely helpful for friends and enemies to identify us at distance. Most important was, that in the heat of battle you could always find your comrades just by looking for the banner.
I would say any group of 5+ men should have their own banner :)