AC servos are usually smaller than comparable powered DC servos of the same power/torque, they also tend to be capable of faster RPM. For example the Allen Bradley motors I have on the Bridgeport are capable of 5000rpm continuous, are 1.2Kw and including the encoder they are smaller than the 916 ozin steppers I had on previously. Ac servos can often accelerate/decelerate faster than DC servos as the windings are in the body rather than the aramature, this also helps with heat dissipation as well.
Most industrial motors come with 2000/2500 line encoders although some have less (1024) and some capable of being set to as high as 4,000,000 counts per rev, the spindle motors I have on my mills/lathes have that capability.
Now which makes to get, well thats not easy to say as I really only have experience with Allen Bradley and Samsung drives but any of the known brands should be fine and even the Chinese makes that are starting to appear should be reasonable, I think Keling are now selling AC setups. The important thing is to really make sure you get matched sets of motor/drive and also unless you are going to be using something like the DSPMC or Galil you have to make sure they can accept step/dir signals.
Hood