But what about when blocksize is too small that the fees become high lowering BTC's usefulness as a cheap payment system.
well, why does it need to be cheap when it is still useful? the tradeoff is this: either the system starts to fall apart by a combination of growing too fast, no incentive for miners and flaky behaviour -- or a well working and tested system, where there is a market for the fee to use it.
i lean on the side of caution, better a well tested system than killing it by a step forward which cannot really be undone.
also: a higher fee for bitcoin just means, that a new market opens up: one for other coins which do what the pissed-off users demand. e.g. really fast transactions of small amounts, etc.