I think you'll be happy sticking with the 26". I replaced my original front wheel (pretty nice, with Shimano DX hub and 32 spokes) with a newer similar wheel with the oversized XT hub, also 32h. It works great with a nice 1" wide slick kept at 100 psi.

I don't know if your 9 spd cassette is in good shape or how well that will shift for you but you can also put a new 7 spd cassette on there and just use spacers as well. I would think a 7 spd chain would not work on a 9 spd cassette - but maybe you already have a 9 spd chain on there?