My Twenty and I are going to be putting down 500 km over the next week... am working on designing a mini velo with 45cm rear stays (minimal) and a seperable frame instead of a folding one to make it a very portable travel bike with full on touring capabilities.
My old Twenty has 37cm rear stays and my touring bags do not cause issues as they sit back just far anough and are angled so heel strikes are not an issue... the space between the rack and fender is where I stow my squall gear and pump. It rides as nice as my full sized touring bike which has 26 inch wheels and if I had mounted the front rack could carry the same gear. The advantages to smaller wheels are many... a 36 spoke 406 is as strong as a 48 spoke 622 and modern 20 inch wheels and tyres impart a great ride quality and are capable of great speed.
Bike Friday has done an amazing design job as they have built a great riding bike that also folds whereas may folders are designed with a focus on foldability without as much attention to how they ride.
If I did not have the ability to design and resources to build a compact tourer I'd consider buying a BF... packability and rideability is more important to me than a quick fold.