Wrap teflon tape around the threads of the bleeder to prevent the air leaks.
The silicone grease could get sucked in and contaminate the brake system. Not what I would use.
As far as the tubing, 1/4" usually works -- some types or brands of tubing are slightly tighter or looser, though. I've also found that most types of clear or translucent tubing will eventually deteriorate from exposure to brake fluid, but tubing is cheap, and being able to see the bubbles is crucial.
Any real hardware store (like Ace or Do it Best) will have clear vinyl tubing for less than a buck a foot (Hint: Meantard's, bLowes, and Home Despot are not real hardware stores.).
2002 Suzuki DL1000 V-Strom, Dark Metallic Space Blue
1983 Suzuki GS850G, Cosmic Blue
2005 KLR685, Aztec Red - Turd II.2, the ReReTurdening