As FleetMan noted, unless you plan to spend over $10,000 on engine mods plus another $5,000 for a bulletproof automagic tranny that can live with those horses, then you won't gain any benefit from a 5" exhaust system. Except braggin' rights at the local pub. In fact, you won't even gain any benefits from a 4" exhaust system. 3.5" is all you need for up to about 400 horses from a 7.3L engine.
A straight pipe puts out obnoxius racket and is illegal in most jurisdictions. So the least-expensive but good mod is to replace the stock muffler with a straight-thru diesel performance muffler, and keep the rest of your stock 3.5" stainless steel exhaust system. The most popular straight-thru diesel performance muffler for the last dozen years has been the Walker Big Truck Muffler (BTM) # 21470, also known as the Dynomax RV muffler. You can buy one from Summit Racing for about $54, and your Midas Man will probably charge you about $60 to install it.
Walker/Dynomax RV muffler - SummitRacing.com
Plus you'll also need two 3.5" muffler clamps that are not available at most auto parts stores or muffler shops, so get them at a big-truck parts store.
You'll gain very little more benefit from replacing the downpipe with a 3.5" mandrel-bent performance downpipe. Replacing the 3.5" exhaust pipe and tail pipe won't gain you anything, but some folks like to replace the whole shebang. Because of all the hype that "bigger is better", there is almost no demand for performance 3.5" exhaust systems, so most of the ones available at competitive prices are so-called 4" performance exhaust systems, including a 4" performance straight-thru muffler. The downpipe begins at 3" coming out of the turbo but quickly expands to 3.5" or 4". So a 4" downpipe actually begins at 3" on the hot end.
In my case, I had a 3.5" Walker BTM for over a year. I was pleased as punch with it. But a sponsor offered me a deal I couldn't refuse on a 4" performance stainless exhaust system, so falling for the hype that bigger is better, I took him up on it. I was disappointed at how little gain the high-priced exhaust system made compared to the BTM. My seat-of-the-pants estimate is that the $100 (installed) Walker BTM gave me about 80 percent of the benefit of the $1,000 aftermarket system. (Performance exhaust system prices are about half that much now.)
They both say I won't see a performance difference with a straight through muffler or straight pipe, just more noise.
They're wrong. Depending on how you define "performance difference", you'll definitely achieve reduced EGT with either the straight thru muffler or the straight pipe. And a performance straight-thru muffler is very little louder than the stock muffler, while the straight pipe is a lot louder. From the front seat with the windows rolled up for the AC or heater to work good, you can't tell the difference in sounds between the stock muffler and a straight-thru performance muffler. But the straight pipe is obnoxiously louder.
As far as "performance difference" is concerned, a straight pipe, or a performance muffler or entire turbo-back performance exhaust system will not give you significantly more power than the stock exhaust system. Maybe a little faster spool-up of the turbo. The reason to replace your stock muffler is to be able to go faster when towing up a mountainside, or pull a heavier load up the mountainside, or climb a steeper grade without busting the pre-turbo EGT red line of 1,250°. Dragging my 8,000-pound trailer over the interstate mountain passes, I can go about 5 to 10 MPH faster without exceeding 1,250° EGT than I could with a stock muffler.
So you'll get more towing power at the 1,250° red line, but not more power when unloaded. Increased power comes from your tune, not from your exhaust system. But even a mild performance or towing tune bumps up against the EGT redline too quickly with a stock muffler. So replace that stock muffler so your tune can produce more horses without exceeding the 1,250° EGT redline. That's not literally "lower EGT", but that's what folks call it.