Sounds just like a bead seating issue to me too.

I highly recommend you read the thread from a couple days ago, because it's full of great info.

Regarding the tube stretching to fit, I think the main issue would be a tendency to lose air pressure faster than usual. If you pump regularly, it might not be an issue. And if you ever get a slow leak of a flat, you may not be able to limp home. On the plus side, you're probably saving 4 grams in using a lighter tube!!!1

By the way, 85 PSI sounds like a heck of a lot for a 37c tire. That's probably too much unless you are a truly huge guy. Overfilling tires is just going to make your ride uncomfy and possibly even slow you down or slightly reduce the life of the tire. I recommend the article on tire pressure and then check out the handy pressure calculator. 40%/60% should be OK weight distribution for a touring bike. You may want to overfill somewhat past those numbers to avoid pinch flats, but you'd be surprised how little air you need to achieve 15% tire drop with 37's.