With the 'standard' size wheel (26-29 inches) you have a certain amount of "wiggle room", in which you can vary both head tube angle and offset a little one way or another for subtle changes in handling, while always remaining in the 'acceptable' range. The point I want to emphasize is that as the wheel size decreases, the "wiggle room" decreases.
Yes, you're correct, - smaller wheels have a proportionally smaller range of trail which will produce desirable handling characteristics but I don't think that's why many folding bikes handle so poorly. (any reputable bike manufacturing facility should be able to produce forks with a rake that's + or - 0.5mm and that's sufficient to hold the trail figure within acceptable limits) It seems more likely that there's 2 possible reasons for the epidemic of twitchy folding bikes. One might be that steeper angles / shorter wheelbases make the bike able to be folded more compactly and in the folding bike arms race they're willing to sacrifice good handling for smaller luggage. The other is that they simply don't know what they're doing. Of course I wouldn't be foolish enough to post these blasphemous opinions on the folding bike subforum or i'd likely be hunted down and have my folder confiscated with extreme prejudice.
Tom