Question:
It seems that with Grundfos, there are 18 gpm pumps available both at 1 and 1 1/2 hp. Given that I am a bigger is always better thinker, why would one chose a 1 hp version?
As a general rule, you don't want your pump to run less than one minute from the time it kicks on at low pressure to when it kicks off. Longer would be even better. A more matched pump is recommended by pretty much everybody. In the absence of other info, presuming the initial choice was ideal makes sense. If you have more information, you might consider the kind of change I was suggesting might be better for you.
Centrifugal pumps of a given horsepower have different GPM ratings. The ones with more stages have a lower GPM rating, because the sweet area in the pump curves for those have higher head/pressure but less GPM. The GPM number is the nominal middle of the sweet area of the pump curve. There are pump curves available for each of the pumps you consider. They graph head/pressure vs GPM. For a given HP, expect the lower GPM pump to cost a little more due to the extra stages.
Part of deciding whether your existing pump was sized right would be to know how long your pump ran (minimum) before the trouble. If it only ran 30 seconds, and if your pressure tank was appropriate, your pump was pumping too fast. We also don't know how low your water gets. The amount of "head" required depends on your water level rather than your pump level. Yet even if your water level is higher usually, it would be good IMO if your pump would provide some pressure if the level dropped down to the pump. But the typical conditions would ideally be somewhere near the middle of the curve, and not into the dashed lines at the ends of the curve.
Of course CSV will make things run longer with a given size of pressure tank, but it does take more power. Whether that is significant, depends. There are various opinions. But everybody agrees that your pump should not greatly exceed your needs.
Do you have a piece of tubing running down your well bore? That is so that you can measure the water level. That would let you tune your selection. It would also let you know if you should be decreasing your water use before the pump actually runs dry. When you pull your pump, consider adding such tubing if you don't have it now. To use that, see how much pressure you you can pump that line up to. Divide the PSI by 0.4335 and that is the current depth of the water in your well.
I have never been in the pump business. I read the good stuff that has been written.
You can measure resistances between wires. That would check for open circuits. One path might be 1 to 3 ohms plus wire resistance and one might be 5 to 10 ohms... depending on HP... 
