I remember this discussion, actually.
Finney, Satoshi, and I discussed how divisible a Bitcoin ought to be. Satoshi had already more or less decided on a 50-coin per block payout with halving every so often to add up to a 21M coin supply. Finney made the point that people should never need any currency division smaller than a US penny, and then somebody (I forget who) consulted some oracle somewhere like maybe Wikipedia and figured out what the entire world's M1 money supply at that time was.
We debated for a while about which measure of money Bitcoin most closely approximated; but M2, M3, and so on are all for debt-based currencies, so I agreed with Finney that M1 was probably the best measure.
21Million, times 10^8 subdivisions, meant that even if the whole word's money supply were replaced by the 21 million bitcoins the smallest unit (we weren't calling them Satoshis yet) would still be worth a bit less than a penny, so no matter what happened -- even if the entire economy of planet earth were measured in Bitcoin -- it would never inconvenience people by being too large a unit for convenience.
Very interesting background. Thanks for sharing!
Unfortunately, the most important factor was missed: inertia to change, and observing the existing convention of 2dp in fiat currencies, and the vast majority of financial computer systems also supporting 2dp.
So, the ideal would have been 21 million million bitcoins, with 100 sub-units each. It would have made for large numbers from early on, like dogecoin has today, but as the network and ecosystem grew, bitcoin amounts would rapidly look sensible in day-to-day transactions. The Italians did fine when it was 1500 lira to the dollar for many years.