I think that, purely in terms of physical enjoyment, girth would matter more than length as dicks go. Most of the nerve endings in the vagina are in the first two-three inches, and a penis that's too long (read, more than six inches for the average teen) would be really uncomfortable, as it would hit the cervix - not a pleasant experience, despite how most porn would have it. But so long as the guy isn't too large to penetrate, it really wouldn't matter if he had a small penis.
In terms of appearance, I think an average-sized penis tends to be more attractive ("beautiful" is the word I want
to use here, but I guess that'd be kind of odd) than an inordinately small or large one - but it all depends on the penis in question. I find some more attractive than others, as I'm sure people who are attracted to breasts find some breasts more attractive than others.
And in terms of sex as a whole... well, a penis isn't really necessary to sex, is it? Female-female couples get on just fine. I'll admit that penetrative sex feels more close to me than other kinds, but no more close than just being held while I go to sleep.
So really, penis size probably matters more to the person who has one.