I was looking at going to a winter wheel and tire set and wanted to put on a smaller wheel. I was thinking about picking up a set of 16'x6.5 steelies and putting winter rubber on them. Would anyone have some advice on whether this is a good idea?
An excellent idea, and it's exactly what I did the first winter I had my '04. They're still being used now for my 2nd-gen.
Steelies work well, since they aren't very "open" between the hubs and the tires, it helps to keep the snow out and building up on the inside of your rims. Another suggestion is to look online or at the local shops/junkyards for used 16" wheels from a 6. 16" wheels from a Mazda3 and Mazda5 will also work.
As for tire size, OEM size is 205/60-16s, and IMO I'd stick with that size. 205s are indeed narrower, which helps the tires to "cut" through snow to gain traction, but the 60-series is also better, since a taller sidewall allows more tire flex, which aids in traction, but also gives a softer ride and smooths out the rough winter roads.
Has anyone had any experience with the "studdable" rubber?
Studdable is an excellent tire for roads with very deep snow and icy conditions, but IMO they can get VERY loud on highways, and can also get very squirmy when cornering, so much that it may feel that your wheels are loosening off the hubs. They can also wear down very quickly.
IMO, I'd stick with the "studless" type. They offer excellent snow/ice traction, and are also well-mannered on dry days and handle well in corners. You'll also get another "good" season or two more treadwear-wise as well.