The human mind best remembers small chunks of information, not long lists. While the current Top 40 format provides exposure to a larger number of performers and songs, a Top 20 or even Top 10 could be more memorable. It would even be possible to have an "extended" list that still went all the way to 40 for those who wanted to maintain tradition.
No, a list with fewer songs would not have a bigger impact than the Top 40 does. Decreasing the number would actually lessen the competition. It would not result in better songs being produced. Artists would theoretically have to work harder to make it on the smaller list, but ultimately the fans decide. It seems as if there is not enough variety as it is and many songs don't have a unique sound. This move would just lump these songs into a more generic sound, much like the cool kids group in high school where everyone talked alike, dressed alike, and sounded alike. Diversity and variety cannot exist when options are limited. If anything, more songs would have a bigger impact.
A list with fewer songs would have a smaller impact because not as many artist would be able to hit the list meaning it wouldn't showcase as many peoples musical talents. It would be a case of the rich getting richer and the poor getting poorer. The more songs the better in my opinion.
The Top 40 list has been around for a long time. People enjoy it because it often has a variety of artists from differing genres. It is listened to by a variety of people. Shortening the list would just lessen the appeal. It would not have a bigger impact because it would bring in a smaller audience.