The problem is that you are asking for simple answers to complicated questions.

I have seen many heads, where a smaller valve would give you better flow.
As an example, a 140 that won an ITB "runoff" race at Road Atlanta was disqualified a few years ago because the valves were smaller than spec.
Anyone can slap larger valves in a head and claim that it improves the flow, will give you more power, but make them prove it.
The valve size has to match the size of the rest of the port. The valve throat needs to be a certain percentage of the valve O.D. The valve seats and their size in relation to the valve size are critical. B20 head castings are limited as to how big you can make the ports without hitting water. Ports can be too big, and although they will flow well, will not work in a street engine. I've got a bunch of the original R sport heads, huge ports, way to big for a decent street engine, and I can beat the flow numbers with stock valve sizes.

Why don't you simply ask KG for the flow numbers showing the improvement in flow that they get comparing the 35mm, 37mm, and 38.5 mm??

Assuming that the 38.5 valve will flow a lot more than the 35 valve, especially at low lifts, then you will have to take that into account in chosing a cam. You can't just look at maximum lift flow. You have to equate the flow at a certain valve lift number with the cam deg at that number. If you go to a valve that flows say 20% more at a certain lift, then it has a similar effect to having a cam that would give you 20% more flow by having more duration and enough additional lift to give you that increase in flow. So you just can't talk valve size in isolation.

John
V-performance.com