Some people have said the closer the better as long as you can manage the heat, but I've noticed light bleaching on my plants if lights are too close. Maybe that's only with the higher strength bulbs. I'm running a 400watter and had it about a ft. away and the tops were turning yellow so I doubled the distance and they're looking better almost overnight.

I'd probably go with the cfl's if you don't have the space for a HID.