When I was starting out loading ammo, I thought to myself, "self, let's think up the most awesome recoiling load ever" so at the time 3" was it. Yep, 2 ounces of shot in an Activ all plastic hull.. Um, ouch. Then I started doing some research. Since I was also loading ammo for hunting, at the time I could launch a 1 1/8 ounce payload in a 3" hull at over 150 fps more than I could in the 2 3/4 " hull. As time went on some of the manufacturers picked up that velocity in steel shot is better than total payload and they started coming out with loads that only held 1 1/8 ounce of shot but launced at 1550 fps (Kent Fast Steel) and there were more modern powders that allowed them to load faster steel.
Back in the days of Lead shot though, THE 3" load was actually a lightweight. 1 3/8 ounces of 2's or 4's in a 3" hull at 1400 fps and it was absolutely awesome on ducks and geese at extreme ranges. The 1 5/8 load usually trucked along at around 1275 and the monster load of 1 7/8 ounces barely made 3 dram skeet velocity of 1200 fps. Personally, on fast moving birds, I wanted something to stop them in mid air and the 1 3/8 load was it. Of course, this translates to 1 ounce of steel shot. So 1 1/8 can be thought of pellet wise as 1 1/2 ounces. I no longer actually load steel shot since the price has come down and performance has gotten better.
On another note if you want to load slugs or buckshot, I had a 3" load for slugs that allowed you to load 2 (two) slugs, one on top of another, and the velocity was in the range of 1300 fps. Hard to do in a 2 3/4" shell, but the 3" shell had all the extra room needed. Another specialty load utilized a 7/8 ounce slug and 6 pellets of 00 buck. It hurt on both ends but was kind of fun to play with.
The 3.5" hull for the 12 was mostly a marketing ploy. A lot of wildlife areas prohibited 10 gauges. The 3.5" 12 allowed people to get near 10 gauge performance in a gun that could be used in the various federal and state wildlife areas. I never felt a need for one but if you want one, go right ahead.