Hmm, I think I will to come to Sharon's defense here. Not that she needs it - she can hold her own
The 8 heads rule is a very good guide and one I use often. Especially in illustration work. Although, if you are going for accuracy and not idealizing, then 7 to 7.5 heads is closer to what most people are. Except maybe fashion models
And with kids, it is better to use 7 heads. But this is a guide, not a written in stone rule that you must follow in every painting. If I was to paint my wife, who is only 4'10", at 8 heads tall I would be idealizing her, not painting a accurate likeness. But at the same time if I painted her as a camera sees her she might appear dwarfish. So I strike a happy medium between the idealized figure of 8 heads and her actual stature. If you are painting from life, it helps to step back enough to take in the full figure as you sight size the proportions.
As for taking photos, it is very important you stand back and not use wide angle lenses to increase the view angle. The biggest culprit in camera distortion is holding the camera at head level then taking a full length shot. When you do this every thing from the neck down is foreshortened and gets worse as you go down. When taking full figure reference it is best that the camera lens be 70-80mm (35mm film camera) and held at about mid-level of you subject. This reduces the camera distortions.
As for how big a canvas and the size of head? I feel it is personal preference and intention of the painting. If you can paint a 1" head and still capture the likeness then you might be able to paint a small full length portrait on a 9" x 12" canvas. And if you are painting on the side of a building then you could paint a head 4 feet tall. Personally, I feel it is the intended viewing distance that matters a lot also. If the painting is to hang in a very large room, you could paint a larger-than-life portrait and it would work out great. But in a normal home, the normal viewing distance would be no more then 8-10 feet at most, so a life size or bigger painting might be disconcerting. I think that is the reason for the 90% life size rule some have mentioned. For me it is about the size of the head, I need a 4 inch head minimum to feel comfortable. I have painted smaller at times, but never on a commissioned portrait.