Dan,
Assuming that you don't intend to drive your preamp from a power amp(!), 1/2W will be fine.
How many steps is enough?
Lots.
I don't think I could live with only 12 steps. Even if you accept the first step as being on the order of 20 or 30 dB, twelve steps isn't going to give you a lot of control. I wouldn't even consider a step larger than 1 dB; most manufactured units seem to be headed for .25 to .5 dB per step. Even the less expensive gear tend towards 20-24 steps, with the more elaborate setups going for 256 steps.
Grey