I see nothing wrong with a 5 gallon for shrimp. I keep my SS/S+ CRS in one, and they're doing great; I just make sure to give lots and lots of filtration. I have a foam-sponge over the intakes of the Eheim Ecco 2234 and Azoo Palm Filter I have on the tank, and I notice when the sponge gets too clogged, the shrimps aren't as strongly colored as they normally. Good indicator of water quality.
As for plants, you probably will want to keep it low to medium-light. Vallisneria nana should be no problem in terms of growing, but you want to beware it outgrowing your tank. Since it'll grow slower, you wouldn't have too much trouble with it outgrowing your tank too fast, but it is something to think about.
About the sand.... Wouldn't the sand just sink down to the bottom? Why not just eco-complete? I personally found sand very tedious to keep clean...
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