Dale-
This includes more info. than what you've clearly stated is all you care to hear. But I want to post what I WANT to post in this thread. I don't feel like starting a new one. Consider part of this just bs info. rather than as answering your question.
My last boyfriend's ex-wife also regularly insulted him by calling him "pencil dick" when they were married. Well, all I can say is consider the character of these women from whom these comments emanate, regardless of whether the woman you've met made the comment directly to him or only to you. Fine if we think and know what we as women prefer, or if we discuss our preferences w/other women or male friends, or especially if it's to be a potential business transaction, but in this case when she has no clue what size you may be---to carelessly make that comment......hhhuummmph!
Have you considered first asking her the size of what she considers to be a so-called "pencil dick"??? Why wait for her to "ask" you??!! If she plans to actually ASK you first, IMO she should have taken care of that prior to commenting on her ex-boyfriend's penis size--that is if she possesses even an ounce of tact. And this isn't some escort situation where she's paying YOU for a specific image/desire she has, so you certainly don't owe her the (absurd) courtesy of first displaying your penis to her in order for her to ascertain whether she finds your size to be worthy of an eventual screw six months down the road!!
Do you know if she ever made this comment to him directly or told him that his size was at the root of the sudden break-up after six months of getting to know him???
And again I realize your post wasn't a request for opinions regarding this woman's tact and courtesy (or lack thereof), so I'll shut up about my opinions on that now
However I personally believe a man deserves to be viewed and appreciated (or seen as a jerk) based on so, so, many other more important things than penis size!!!!
Here are some facts that at least relate to your question; Kinsey studies have reported the average penis size to be 6.16" in length and 4.84" in girth.
However, IMO what I would find to be more reliable is a recent study conducted by LifeStyles Condoms, as they have a financial interest in providing the products which would target the largest market. This study, which included 300 men, showed the average penis length to be 5.877" and average girth to be a bit larger than Kinsey's at 4.972". I believe their sample size was larger than Kinsey's although I don't remember exactly...nor do I know what an acceptable sample size would be to produce a reasonably accurate result based on some desired and reasonable # units of standard deviation. But hell, as you'll read further down it's really not that important anyway.
So, according to these studies you're within what would be considered "average" in size, although you didn't mention your girth. And yes, often girth is more important in producing vaginal sensations for a woman.
I perform sensual massage so I see a hell of a lot of penises and penis variations very closely, as do the other women on this board whether escort or massage. I'd say that what I've seen to be average would be consistent with the LifeStyle or Kinsey measurements, (or actually the mode that I've noticed, since I don't measure each man and calculate a monthly or rolling average value
).
Back to the topic of my bf who was found to be unacceptable in size by his ex-wife..........well, I found him to be incredible in bed. And I'd guess him to possibly have been average or maybe even a bit smaller in size than the average 5.877" in length.
Our sex life did take what would be expected--TIME for practice in finding the best positions and the build up of comfort that often produces greater and greater experimentation, exploration, etc. But wow, when we got it down right, (which actually took very little time at all since both of us are ultra-high in libido thus the frequency of our practice was quite high!!), the way his penis rubbed my clit during intercourse (due to his smaller size in my case) was incredible. For some reason due to his size, the action in that area was just really increased. And personally I can't stand to be accidentally banged against my cervix by a big penis, and due to my being smaller framed this wasn't an infrequent thing w/my prior, (and larger), boyfriend when we'd get into things a bit more....forceful, aggressive, and animal-like ;-D. It was perfect with my last smaller boyfriend though.
And there are always plenty of toys available when a little more "filled" feeling is desired!!
But anyway, my last boyfriend was a wonderful lover and also paid attention in so many other ways. For many ultra-sensual women, it's the whole experience and package that matters. Virtually our entire bodies can become erogenous zones when a man makes an effort to explore (and vice versa)! Then the penis size becomes so much less important even if she does prefer the larger variety...And I'll tell you one thing--learn where the woman's g-spot is, how she likes it rubbed/stimulated, and your penis just may become secondary to your talented finger/fingers!!
Become a master of a couple of other things loved by most of us women (like tongue techniques) and you've got it made!!! Most men overlook REALLY learning how to excel in these areas I've found (or listening,paying attention to what we like as individuals) --especially the ones who are larger and simply take for granted that a big cock will be plenty. And I'm just saying this is in some cases. I don't mean to offend any well-hung dudes 
It seems you guys ask about this so often and it would be so nice if you knew the benefits to being "average" that many of us ladies find there to be. Sure...some may love and need the huge, deep f*ck by a big one, but there are plenty of us out there who aren't too picky about that and know that as time and quanity increases, quality, skill, and creativity does too. And I don't think this is strictly dependent on penis size! 
In short (long), my answer is---as long as a man is good in bed and is willing to experiment and make efforts equal to mine, I don't care what his size is. It makes no difference at all. His overall sexual skills matter much more and include a hell of a lot more instruments than his dick. This supercedes penis size for me anyday!!!! If we're comparing two men of different sizes of which neither possess any skill or sexual generosity, I just plain wouldn't care for either one! Or if I HAD to choose I'd probably choose the smaller so my cervix won't get painfully banged! But...a large man of skill would be considerate of this and avoid it
Nope, the penis size alone just doesn't make a difference to me--too many other factors involved in the overall experience of a sensual love-making session.
Here's a link that will give tips on showing her that an average or below average size penis can be every bit as enjoyable..