A matter of taste. I do not know how performs a 120 on the stock rim, but I prefer the extra stability that the bigger wheels have provided, as the bike is jacked up it was a too nervous at high speeds. I do not find it very different at slow cornering though.
The slim stock tyres just were the same ones of the FZ400, Yamaha just threw in the bigger engine and sporty brakes, without taking care of their extra power and weight. I do not know if it was costs saving or really they liked their performance better, but it is weird that Fazers are the only street bike with a 110 front wheel, specially with these powerful brakes and quite heavy weight. Either I do not understand why they did not use 4.5" rear rims instead 5", if they liked the 160 tyres.