Believe me, while developing PT-1210, I have given this a lot of thought!
The short answer is: depends on what software you use.
The main problem is these little screens have incredibly poor dot pitch/definition, so most interfaces will look like absolute and utter garbage.
First off: you do NOT want something as small as the one you linked to. You won't be able to see anything there. Unless you use software with proper readability on small screens or you don't need the screen much, go bigger. If space is really that much of an issue, try your luck with that tiny one.
I have a screen like this:
The size is perfect (7" @ 16:9) and for my needs, which revolve around PT-1210, it's perfect. I also have optimized PT-1210 for a screen of this type so, yeah, best choice if you use that.
Protracker or Octamed will have all garbly fonts. I know I tried them before. A command line will be hard to read. Deluxe Paint is shit with it. The resolution is absolutely dismal.
Now, if you are going to use Protracker or something not optimized for small screens I can recommend as your best bet a PSOne screen.
The resolution is really good, the aspect ratio is right (4:3) and if you can be arsed to modify it, you can even input RGB for a perfectly crisp image. I used one with composite video and it was good enough! all you need is one of those Sony miniplug to 3 RCA A/V cables and you're ready to go.
In brief, in my opinion, your real options I think would be something like what I linked above or a PSOne screen. Anything smaller is unreadable and anything bigger will probably be cumbersome to carry around.
I hope this helped!