Macavity, I've got to say that my opinion is just that... I don't know with much emperical evidence which would win out given all factors SEO. In my case, we saw increased time on site and other factors after we shortened the urls:
We did not experience any change in traffic - if anything our traffic increased (slightly).
Based on my own personal experience I'd go with shorter URL's every time. Not just because it doesn't seem to affect the SEO... but because users appreciate it.