Whether it is code or not, we can't tell. This isn't an NEC issue, but a local building department/POCO issue. Further, service conductors operate under different rules than ampacities within the house. You pretty much are stuck playing by their rules.

Aluminum is pretty much the standard for those big service conductors and is not a problem.

Perhaps the POCO representative just misspoke. Only some of the POCO people are technically knowledgeable.
Most likely, 200 amps will be sufficient for your new house.
If your build includes a couple of electrically-powered point-of-use water heaters, then the 400 amps service could be realistic.

This post was edited by bus_driver on Thu, Oct 23, 14 at 14:58