All other things being equal, smaller diameter drive wheels give more tractive force, but they have to spin at a higher rpm to maintain the same linear speed. Being that there is a maximum safe RPM for any reciprocating engine, this equates to a lesser maximum speed.
Inversely, larger drive wheels give, all other things being equal, lesser tractive effort, but greater potential maximum speed.
Well I think the speed-traction characteristics mostly depend on the cylinder stroke in regard to the wheel diameter and not only the wheel diameter. This is effectively a gearbox for the steam loco. But yes, usually freight machines have smaller wheels than the passenger ones and the SO17 is definitely a freight loco. I'm not actually a steam expert.
Heres a living breathing SO18 for ya.