First you have to have a proper fit, no debate on that.
How you arrive there could be up for debate. Assuming I could get properly fit on a 54 with more seat post showing and a longer stem or a 56 with shorter stem and less seatpost. All other things being equal I personally prefer a 54 with longer stem.
For me the more compact I can get the frame the better. I feel the bike handles better and is more responsive.
Toe overlap is a non-issue in my book, I lean to turn, I hardly ever move my handlebars more then a tiny bit unless it is at a very slow speed and sharp turn. Then I am smart enough to pedal backward and get my foot out of the way.