For a short person with long legs (standard female physique), 26" makes more sense. This allows for less toe overlap with the same tube angles.

For a taller person with shorter legs (standard male build), 700C is much better, IMO, but 26" works fine. The reason I prefer a larger diameter wheel is that it rolls over road and trail imperfections better. See the trend towards 29er (700C) for mountain bikes, which is driven by this improved handling of the bumps along the way. In years past, the selection of off-road tires and even wide on-road tires was quite limited. However, with the trend towards wider road tires and the advent of the 29er, plus renewed interest in cyclocross, there are plenty of quality tires to choose from when touring on 700C.