The reason I put 165mm cranks on one of my bikes was that I converted it to 650B and the botom bracket was lowered and I figured shorter cranks would give me better clearance and reduce the chance of pedal strike. As I mentioned above, I either don't notice the difference, or I prefer the shorter cranks. Or maybe it is just that I prefer the bike.

Shorter cranks also might lessen the amount of toe overlap with the front wheel or fender; for some cyclists this is an issue.