Ron, above, is known to run as small as 305 with really fat and deep section cushy tires, so rolling circumference that is larger than typical for that rim size. That said, without that, I'd recommend running 20"/406 wheels, because for me, that is the smallest wheel that will provide me a sufficient top gear, without using an Internal Gear Hub for an overdrive (like Brompton uses for their 16"/349 bikes), or a huge chainring or tiny high cog as some have done, I can use standard external-only gearing of 50/34 x 11-30. Now this is not going to give me a racer-high, only 85 gear inches, which is enough to pedal down mild grades not steep enough to just coast. Steeper, and I just coast. For my needed 21 gear inch low on 406, I need either my 34 x 30 (next cassette will have 34 or 36 low gear), or a large 1X cassette in the low 40s for low cog.

The above bike is an "occasional folder", with constant pannier use as a townie, so I need enough chainstay length (AND a rack that holds panniers behind the rear axle) for heel clearance; For a "frequent folder" for commuting, I might prioritize smaller wheels for more compact carry.