I know a lot of people say not to keep Damsels in small set-ups, but I think Blue Damsels do just fine. When I first started keeping marine tanks I kept a Blue Damsel in a 2.5 gallon with Live rock and Live Sand. It seemed to work quite well. Because they are so teritorial, I think even a small tank meets their needs. It provided a lot of movement and color in a small tank. There seemed to be plenty of swimming room, but I certainly wouldn't go with anything smaller than that. As long as water changes are done regularly, I don't see the problem. A Gorilla crab hitchhiker which I mistakenly let grow up in there and get big eventually got him during a water change. Otherwise, I think that Damsel would still be doing fine.