no I don't take the pedals off. The 2006 has fixed pedals. I understand the 2007 has quick release ones. I usually just adjust the pedals so they don't interfere with folding.
Narrower tires? Hadn't thought about it. I like the Big Apple tires because the Lakefront path in Chicago often has a lot of road grit (it goes along Lake Shore Drive) and glass from drunken morons on the path at night (or possibly tossing beer bottles out the car window, aiming for the lake and missing -- I've actually seen that happen).