Certainly, here in the US, the low weight limits are a problem. Related to the weight restriction is that many of the bikes flex under any serious load. So if you decide to have long handlebar posts and seatposts, expect to deal with > 90kg men.

The problem with the 349 -- i.e., the ~16" wheel -- is that the selection of tires is much smaller than the more common 305. For instance, the the Schwalbe Big Apple tires are available in 305 but not 349. So if you went with 349, you will have to include some sort of shock absorbtion system which makes the bike heavy and more complicated.

A nice perk is the ability to push the bike on wheels while folded. The Brompton/Merc with the skate wheels has this function. Many of the Dahons have this functionality as well (just keep the seat post extended). This makes a heavier bike more acceptable. Here is an example http://www.gaerlan.com/bikes/dahonfold/dahonfold.htm

Even though you restrict the design for city/urban riding, any well designed folding bike is useful for a lot of of purposes. Using standard parts and sizes will allow your design to be applied to many purposes. For an example, look at Dahon's Speed series -- Speed 8, Speed Pro, Speed TT -- and similar designs in its lineup. Dahon, unfortunately, has many proprietary parts. So what would I want to see? If the rear hub-spacing is 132.5mm, then an owner has a lot of options for gearing. Furthermore, if the seat tube has a diameter of 34.9mm then a front derailer can be installed at some point.

Good luck!