Yes, the 5 party limit does indeed feel a little bit more limited in a good way. It doesn't improve readability at all, though, somehow it's even more of a clusterfuck than P1. Although P1 is in the unfortunate state of Priests carrying the entire party by themselves and the whole game playing completely different if you don't have one in the party, so there's that.
My prediction is that everything will be ok except writing.
Compared to P1 and average video game standards, the writing in the beta is ok. As in, it's over quickly enough that it doesn't get on your nerves. I'd say it's on the same level as White March. It's still terrible compared to pretty much every other standard, but that's neither here nor there.