I've never given much thought to going smaller with a reel, and generally stick to reels that are sized for the rod/line. Balance as ditz has said is something to consider. I don't want my rod to feel top heavy, and like him prefer a bit of over balance on the reel end. I have come to prefer large arbor reels too, simply because of the fact is helps reduce those tight loops of line on the reel, and of course aids in retrieving line a little faster.
For the most part, I want a reel that has more capacity than I may need, because my reels do double duty, for warmwater & tidalwater, where I may encounter fish species that warrant the additional backing, so I use reels that are made for that rod/line sizing or a larger reel.
My 10 wt has an 11/12 wt reel on it for that very reason. I may never need the extra backing, but it's there in case I do.
I guess you have to make a judgement whether or not you really need the size reel or can make due with a smaller reel.