Dude, i was in a same position a year ago with the same questions that you have. i took her to mall for shopping(Macy's) and while looking for other stuffs took her to the jewelry section and figured out her ring size( made some excuse ,don't remember now :) ). I came back to Macy's couple of days later and picked up a ring that i liked based on her size. The reason i choose Macy's was they have discounts and you can buy a $1000 ring for $250(thats what i did). You don't have to pick up an expensive or a big stone . My suggestion would be to make it small and simple and spend upto $500 for it after all its more symbolic cuz whats matters is love between you and your gal.

Good luck to you !! Hope it goes well!!