Imagine that you are watching the tv, Does the tv have interlaced colors? No? Well Then neither should your paper. Single spaced, two sided 8.5x11 notebook bright white as a kite. Duh.
Single spaced is fine. I wouldn't make the font too small (stick to twelve pt if you're using times new roman) because you don't want to give them a headache. For the most part, unless it's clearly stated, these things are left to your discretion.