I do not think that "more torque" is a justifiable advantage of smaller diameter wheels. It's possible to manipulate gear/sprocket ratios to cause a smaller wheel and a larger wheel to have the exact same torque and speed.
I don't think a larger contact patch is correct either, because wheels are circles and technically circles are tangent at only one infinitesimally point...
. Of course, it's the real world, so the contact point is more than just an infinitesimally small point, but in order to have a larger contact patch, the wheel would have to compress a bit. Rigid metal/plastic wheels do not compress very well.
Thanks for input elsewhere, guys!