I found the 3 vs. 3 battles to work well, it caused the battles to last just long enough to really figure out how to move around the stage without overstaying its welcome. 4 vs. 4 could work too, but you'd need to do extra testing to see which is better. It could be interesting to have larger battles as special rounds, such as a 5-monster team that has to defeat a few waves of monsters, but if you fine-tune the battles more I don't think you need to have too large of battle parties.
If you're planning on a commercial release, I would recommend spending a lot more time on drop rates. Players don't know if you're modifying the drop rates behind the scenes, so you could tweak things so that a player is less likely to get the same monster over and over and over.