Your factory brakes are already quite good, the X was rated for a 130 foot 60-0 stop which is better than many sports cars. Adding an inch to your tire size isn't enough to bother with a brake upgrade in my opinion. I just use the factory pads, and the 2nd-cheapest shoes.
As for the smaller wheel inside the same diameter tire, it allows for a softer but possibly sloppier ride, the ability to air down more on the trail, and protects the wheels from damage on the trail. A larger wheel in the same diameter tire has the opposite effects.
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