I have been slowly dialing in a bike I got in trade a while back. When I got the bike, there were gear combinations that I could not hit because the chain was too short to wrap around the biggest chainring and cog. I replaced the chain with the recommended length (using the biggest chainring + cog + one extra link method and found that the bike now hits all gears fine however, when I am on the smallest cog and smallest chainring (I know, not really a good place to be) the derailleur is not able to put any real tension on the chain and the chain coming from the bottom of the chainring rubs against the chain that is wrapped around the upper jockey wheel of the derailleur. The low tension (or lack thereof) also makes it easy for the chain to get bounced off the chainring.
There are some who would argue that I should not be able to hit all the gears and that I should put the chain back the way it was. I think that potential problems caused by attempting to shift into a combination that can't work are the more serious (muscling a shifter and pulling the cable loose under the screw at the derailleur, for one), so I will stay with the longer chain and look for a solution elsewhere.
After riding the bike for a while, I think the solution is to replace the smallest chainring with a bigger one because that ring is just too small (20 teeth). I find that it is so small that when I try to use it with the larger cogs I can't maintain enough forward momentum to keep from falling over. Maybe my poor riding technique is to blame, but I think the chainring is too small.
The reason I go into all this is to point out that the cage length you select will be a function of your cogs and chainrings and the gears you want to use.
Derailleur specs usually list a range of gears over which they will work (max/min chainring and cog sizes). I believe cage length is one of the things that affects the spec.
All that said, a longer the cage will make it easier to bend your hanger.
TD