This is a very interesting discussion, and I don't really know any answers. I do have a few ideas: If you keep a betta in a one quart container of perfect water, is that a problem? I don't think they feel claustrophobic like we might project anthropomorphically upon them. On a similar theme, I have adopted 3 wonderful greyhounds in my life; they spend 16 hours a day in a 3-foot cage, let out only for exercise. When I get them, they seem to be happy, well adjusted dogs.
I don't think we really know when animals are happy. We can guess based on behavior. I do know we project and imagine a lot about how they feel, if they really feel, and to what extent.
To the original question, my best answer is that water quality is more important than water volume assuming a minimal ratio of animal to water.
Just my 2 cents