Generally speaking, if you go to a smaller number of teeth on the same pitch (chain pin diameter), the sprocket wheels will get smaller. This results in a higher tension on the chain for the amount of torque you're transmitting.
Higher chain torque means more wear and stretch over time, along with higher chance of the chain breaking. Remember the 1990's ZR-1 Corvettes with the Lotus-designed LT-5 DOHC engine? They had to put teeny chain sprockets on the cams to make the engine narrow enough to loaded up through the frame rails at the Bowling Green assembly plant. The timing chains see really high loads as a result, and there have been some spectacular failures.
There's no reason to go down in size on the sprocket wheels, unless you just don't have room. There's plenty of room on our beloved FE's, even SOHC's, for good-sized chain pins and sprocket wheels.
