I believe 29ers are good for taller riders. You get a more pleasing proportion of frame to wheel size.
I would not say that a 29" hardtail is better than a full-suspension 26" bike. Suspension is suspension. Wheel size is wheel size. Bigger wheels really don't make up for suspension. Maybe in some abstract sense they do, but not when you hit a root on the trail and get your butt kicked by the seat. If you like full-suspension in the 26er size, then you'll want in the 29er size too.
As far as going down a size goes, I would be cautious there. It might depend upon the brand. Start by comparing effective top-tube lengths.