Maybe I read your question wrong. I thought you were asking about what size hole to put in NEW panels when you are going to plug weld. If so, as mentioned above you can go as large as a 1/4" [6mm] hole but I use 5/32" [4mm]... however, I have a TIG welder so that may be too small if you are using MIG.
For the record, step drills make cleaner holes in sheet metal without raising a burr and as was mentioned above, there are spot weld cutters that do a clean job of removing old panel welds. Regardless, you will not be very happy with the results using a "regular" 118 degree point drill bit on sheet metal.