My exhaust setup

[Insanity]

For some dyno proof of no torque loss, here's a 3" (considered way too big by half-assed tuners everywhere) single exhaust on an NA Nissan KA24DE (2.4L 4cyl):

http://forums.freshalloy.com/ubbthreads/showflat.php?Cat=&Board=UBB9&Number=67651483&page=0&view=collapsed&sb=5&o=&fpart=1

Man, look at all that torque loss... oh wait.

Looks like they gained torque coming off idle compared to the stock system.

[Insanity]

And yeah, you can go too big. If you tune for a CFM that your car doesn't produce, velocity will simply decrease without any backpressure reduction. You'll never be worse off than stock though(unless the stock system is tuned already, with free-flowing mufflers and whatnot). You just might do better with a smaller system.