Generating molecular graphs is a challenging task due to their discrete nature and the competitive objectives involved. Diffusion models have emerged as SOTA approaches in data generation across various modalities. For molecular graphs, graph neural networks (GNNs) as a diffusion backbone have achieved impressive results. Latent space diffusion, where diffusion occurs in a low-dimensional space via an autoencoder, has demonstrated computational efficiency. However, the literature on latent space diffusion for molecular graphs is scarce, and no commonly accepted best practices exist. In this work, we explore different approaches and hyperparameters, contrasting generative flow models (denoising diffusion, flow matching, heat dissipation) and architectures (GNNs and E(3)-equivariant GNNs). Our experiments reveal a high sensitivity to the choice of approach and design decisions. Code is made available at github.com/Prashanth-Pombala/Molecule-Generation-using-Latent-Space-Graph-Diffusion.