A set of compound turbochargers,...
A set of compound turbochargers, like this setup from ATS, is a good choice for performance and drivability. The smaller turbo is used to spool the larger one, and the pressure ratio requirement is split between the two turbochargers. Oftentimes the stock turbocharger can be used for the smaller turbocharger, which also helps offset the cost of such a kit.
Turbos And Towing
If you tow heavy loads (10,000 pounds or more) a larger turbo might be a good idea. Why? Towing puts the engine under a tremendous load, which means exhaust gas temperatures need to be a priority. An aftermarket turbocharger (or better yet, two compound turbochargers) will flow more air even at part throttle, resulting in lower EGTs across the board. With a diesel engine, running richer will make more power, but leaner will be better on exhaust gas temperatures. If you're adding more fuel to your truck to tow up hills, make sure you balance it out with more airflow.
Size Matters
A turbocharger of a given size will behave differently on a 7.3L Ford Power Stroke compared to a 5.9L Cummins. Why? The Power Stroke is a larger engine, so more exhaust gases are produced, which means more energy is available to drive the turbocharger. It's for that reason that the 7.3L Power Strokes and 6.6L Duramaxes come with larger turbochargers from the factory. If you're looking for an engine that will have a wide usable powerband, use a medium-sized turbo on a large, high-rpm engine.
Two Turbos Are Better Than One
Once a turbo starts to produce boost, it causes the engine to produce much more power, which in turn creates more exhaust drive pressure to spin the turbo. For this reason, having a compound turbo setup with one smaller turbo and one larger one, is very beneficial. Having one turbo blow into the other is also a very good way to reduce the work cycle of the turbocharger. Two turbos, producing 30 psi of boost each, will make 60 psi worth of pressure when combined, which is a lot easier than getting one turbo to produce 60 psi. However, going to a set of twin turbos results in very high intake air temperatures due to the raised boost pressures, so water injection, nitrous, or a good intercooler are highly recommended. Installing a second turbocharger in the engine bay can be a real nightmare and requires complex plumbing, which is why compound turbo kits are usually so expensive.
Trucks with larger injectors...
Trucks with larger injectors and huge turbos usually have poor street manners--they're smoky, and slow to spool. Jorge Alfonso, an '07 Diesel Power Challenge competitor, had trouble spooling his mammoth 71mm-inducer turbocharger at high elevation (notice all the black smoke). If you're willing to sacrifice street manners in the name of power, a turbocharger this large can be well worth the effort. Since our event, Jorge has made 900 hp on diesel fuel, and 1,300 hp with nitrous.
Why Wastegate?
A wastegate is a device that allows the exhaust pressure coming out of the engine to be diverted around the turbine wheel in the turbocharger. Bleeding off the exhaust drive pressure allows you to control the turbo's speed and run a smaller turbo exhaust housing, without choking the engine or overspeeding the turbo. Using a turbo with a wastegate allows you to tune the turbo, gives the engine better response, and in some cases, allows you to run a larger turbocharger.
Most turbochargers have internal wastegates, which are fine for street applications, but they're limited by how much exhaust drive pressure they can divert around the turbine wheel. If you're looking to use a lot of nitrous, sled pull, or drag race competitively, an external wastegate is good because it attaches between the exhaust manifold and the turbocharger and can divert more drive pressure.
Power Stroke and Duramax owners have it tougher because of the placement of their turbochargers, which makes wastegating more difficult. For the Duramax and Power Stroke guys, upgrading to larger, but quick-spooling turbos (which are usually pretty expensive), is their best bet.
About The Aftermarket
Stock turbos can only do so much. If you're trying to get 50 pounds of boost out of a turbo designed to operate at 20 psi, expect the parts to start flying. The diesel performance industry has embraced these problems by selling upgraded turbos with wastegates, modified compressor and exhaust housings, and different compressor wheels and shafts. If you're the type of person who likes some bling, polished compressor housings are usually available. If you're in it for reliability, improved oiling, ball-bearing supported shafts, and water-cooled turbochargers can be had as well.