Nevada is a bizarre state that is wildly divided between old-school union Dems and powerful far-left forces. It wouldn't be a good test. Michigan's size and diversity make it a great choice. And please, do away with caucuses.
Size is actually the problem with Michigan. Iowa and New Hampshire have been long held up as states that aren't expensive to compete in and provide benefit to candidates who aren't just mega-funded.
Truthfully there isn't a very good replacement for Iowa that's of a respectable size and winnable for Democrats besides Nevada, Hawaii obviously isn't going to work, New Mexico is weird and not very demographically representative either, New England already has its representation and every other state is either too white or in a very expensive media market, and there's absolutely no good reason and plenty wrong for Delaware to be the first test. In terms of a workable diverse non-Republican state that isn't too big, Colorado is probably the best choice, Denver might be a pricey media market but it's not like a coastal one at least. Vosem's suggestion of Kansas actually isn't insane either (crazy we're now talking about that as more winnable than Iowa although yeah it has a D Congresswoman and Governor at least), although that's still the state with the longest streak of never sending a Democrat to the Senate, at this point probably still too Republican to work.
If we're going to ignore size and go just based on demographics and strategic importance than I think the choice for the first state is blatantly obvious: Georgia.
