First, I just have to say how cute this dress looks on. I absolutely love it and I can't wait to wear it to the anniversary party I bought it for. Based on what other reviewers said, I decided to size up and go with a medium, and I am glad I did. I am 5'-2", 135#, small chest. In just about every mall brand, I wear a small or size 4, except at stores where they tend to run bigger (Loft) and I get XS and size 2.
The medium fit me perfectly, especially over my hips and rear, as I tend to carry my weight in my mid-bottom section (hello, squats!). I think if I would have gotten the small, the inner layer would have pulled across my hips, but the medium drapes across that area perfectly. Also, because the dress is so flowy, the extra fabric isn't really a big deal.
The dress does run a little short, but since I am on the shorter side, it wasn't as noticeable, only if I raised my arms up. And even then, it was only mid-thigh. With my arms down, it hit me just above the knee. Anyone 5'-5" and above might find this too short for their liking.