Whether because of actual physical preference or just thinking that it's somehow better thanks to the saturation of porn ideals into our lives, I can say that most girls I know laugh at men with a small penis, and talk about how sex with a man with a large penis is better. When I'm talking large, I'm saying hovering around the eight-inch mark. A friend of mine with a penis of exactly eight-inches has had multiple women say to him that size does matter, and his penis size made the difference. He even had one ex-girlfriend, after they broke up, complain how he had set an unreasonable standard in her mind and she no-longer liked 'average' sized penis because of it.
Whether, again, it's psychological or physical, from my own anecdotal experience women want a man with a big penis, even if just for the bragging rights.