Quote Originally Posted by factotum View Post
I think if you were planning on building a permanent inhabited station in orbit (e.g. one on which you expect people to actually live their lives on) then you'd want to have it quite a bit higher than the ISS, which has to have its orbit boosted every couple of months due to atmospheric drag--a problem that just gets worse the larger the mass of the station, because you need more fuel to make the boost burns.
Once you've gotten big enough to solve the shielding problem, definitely. I suspect shielding is the main reason for the current altitude.

Just having lots and lots of mass for the periphery would help with that a great deal. Big ol' water tanks and such. They sort of double as armor for micrometeorite strikes too. If you go big, you have to store a lot of stuff somewhere, you might as well stash it where it provides useful shielding.

That said, building at roughly the ISS altitude and boosting it later isn't a showstopper. Drag should scale roughly on the cross section of the station, not on density. Assuming you're building in 3 dimensions, the square cube law works in your favor, and drag scales much more slowly than mass.