System 7.0.1 will just BARELY fit on a 1.44MB floppy (with just System and Finder). However, System 6 fits fine with plenty of room to spare, including room for desk accessories and control panels, if you want. However you can also strip down System 6 to the bone.
This all of course depends on what you are trying to do, however for a simple boot floppy I like System 6 because it has enough room for any diagnostic or recovery tools needed (Ethernet drivers, RAM Disk to help take strain off the FDD, etc). System 6 also boots off a floppy faster and if you have to play the FloppySwappy™ game, you'll have an easier time using RAMDisk+ 2.01 and swapping boot volumes. Much, much easier: just install all the extensions and DAs you need on a floppy disk with RAMDisk+ 2.01, insert that boot disk, start RAMDisk+ 2.01 whilst holding down the Option key, enter in a memory value suitable for your needs (2048K should be more than enough) and it will automatically copy the contents of the boot volume to the RAMDisk and auto-switch volumes AND ejects the floppy for you. Needless to say that is one trick you won't be doing with a modern OS, at least as simply.
If you want to really cram it, although I've never used it before, this
might work to help you squeeze every last byte out of it.
With those 1.44MB or 800K disk images, you must use a computer with a built-in floppy drive -- OS 9 and a USB floppy drive won't work. (It won't say "Make a Floppy..." under the menu.) I heard there was a system extension to "fix" that (or it might be a ResEdit hack) but I've never encountered it. Because those disk images are a "image" which already have the file system, catalog, etc included, they won't work via "straight copy" -- it has to be done with something like Disk Copy 6.3.3 or 4.2. Also watch out for OS X -- it adds additional database files which can chop your bytes from 1.3MB regularly to 1.1 or even 1MB -- another reason to use an older Mac.