At 5'6" that would put you at S on Giant's sizing chart. I've recommended several people with the same height as you the same and they have no complaints riding the bike.

The arm pain is due to overexertion from a very long top tube + stem.

It's easier to fix reach on a smaller bike using a longer stem.

Stay away from the LBS that is selling you the medium. They probably just want to dispose of the M sized bike.