Depend largely on how you define a small reel i suppose.
I have always had a weight obsession and have tried loads of Large arbour lightweight reels, but i always seem to come to back to Ari Harts reels for Aesthetics and the lovely sound they make, despite their relatuively small spool diameters, and heavier weights. They are getting rather expensive now though
so may prove to be a good investment
I have a couple of very small 2.5" spool ATH reels that i use with my 4wt lines. The ATH reels have small wide spools compared to say a CFO or Hardy lightweight. In fact the Traun F1 i have is overall bigger than a Featherweight Hardy but has a much larger diameter spool centre and is substantially wider, despite having a smaller spool overall diameter. The featherweight will take about 40yds of backing with the 4wt line but the Traun takes 100 plus a full 4wt. The ATH reel is also heavier.
I have about 20ft cut off the running line on all my river lines so i get more backing on to build up the spool to reduce coiling, Mind you a single good stretch at the start of fishing makes all my Barrio lines straight
The extra weight is handy with the longer Cane rods.
So i don't think the diameter makes a whole lot of difference, as long as it suits your needs and you like it
The weight does have an impact but its a balancing act between form and function for me. If i can make the small Dinky sized reels work effeciently then do rather look nice on the end of my Cane rods.
Sandy