Square rugs are not easy to find and actually wouldn't look nearly as good as a rectangular rug. I would definitely get the larger-sized rug. You need to have the chairs completely on the rug when people sit down and get up and push their chairs back. There's nothing worse than having the chair catch on the edge or actually go over onto the floor.

I wouldn't choose the same rug for the living area but rather one that coordinates in color and pattern. Having said that, I have seen some rooms in magazines where the same rug is used in both places, so I suppose it's your choice. For myself I would choose two different rugs. It actually will make your one room look more like two, which is a good thing since the two areas have different functions.