use this to determine what size would work http://1010tires.com/TireSizeCalculator.asp
smaller wheels are absolutely the way to go as long as the calculator at that site returns at most a 3% difference. greater than that will cause faulty speedo readings (which will be off by a percentage... so faster you go will be off more).
smaller wheel and tire is better for winter... both in diameter and width. small width increase effective downforce per square inch. many folks will try to say that a larger tire will give more grip but thats absolutely the opposite of true. (http://www.tirerack.com/winter/tech/...jsp?techid=126
studless is the way to go as most states have laws against studded tires and you can get a very cost effective and good performing setup with studless.
best snow tire is blizzak ws70 (per tire rack and consumer reports... and have used them personally... excellent rubber below 35 degrees). performance snow tires are a joke... they are neither good performing nor good in snow. if your goal is to have a performance snow tire, then move to a warmer climate.
if you dont care about looks, you should be all set for ~$900 (without TPMS).