I assume that the difference is also related to frame geometries. 26 inch wheel bikes are usually mountain bikes, and mountain bikes are not designed for fast riding on the road -- those long chainstays really sap me on steep urban climbs. Also, body position, especially on a comfort-modified mountain bike, is not conducive to hard efforts. 700c wheels are found on road bikes and are typically designed with much "faster" geometry. I think this is why, say, a 26inch LHT doesn't handle much differently from a 700c LHT since both frames are designed with exactly the same goals in mind.

Also, skinnier and harder tires offer up a much bumpier ride, which can be misconstrued to be a faster ride.