I have a .65 Saito on mine; it will fly fine with a .56, but the bigger engine allows you to use a scale prop (14 inch at 1/5 scale = 70 inches at full scale, and the full scale uses a 72 inch prop). I think the new .62 Saito would be perfect. It's the same physical size as the .56, which means it would fit entirely within the cowl if mounted inverted. The .65 is bigger, and the valve covers just barely stick out. I also have a Hangar 9 80 inch Cub (essentailly the same scale), and I have a .72 Saito on it. The other advantage of the slightly larger (overpowered) engine is that you can fly at lower rpms and the sound is great. Either way, with any 4-stroke o this plane, you might have to recess the firewall a bit, to maintain the correct prop hub location. It's an easy mod.

Mine is full span, since I wanted to make it a military version. The neat thing about the 1/5 Sig kit is that the plans include layouts for full span or clipped wings, you can build it either way. I'd recommend the .72 if you clip the wings, just so you can take advantage of the greater aerobatic performance.