Is there any reason not to set up the install so that major upgrade is always done and productcode changed?
I find that supporting different kinds of installs needs more code, and "repair" install seems to work easier with major upgrade. Also the application that needs to be installed is not very big, thus there is no need for "service packs" or patch installers.
No. If you application is small and you don't feel the pain of uninstall and install then Major Upgrades are the easiest thing to do.
I'd only move to the more advanced update mechanisms if the Major Upgrade user experience was unacceptable.
I generally find that minor upgrades are only useful in a few cases:
1: There is a bug in the uninstall sequence of the installed MSI. Since a minor upgrade does not uninstall the product, but merely reinstalls it. This allows you to fix whatever was wrong in the uninstall sequence before it is called.
2: There is a very small tweak required for a very large product. Say a bug fix for a single file or so.
3: You want to deploy a patch for your product. MSI does allow major upgrade patches, but these are even more complex to get working than minor upgrade patches (which are also difficult).
The "Small Update" feature should never be used for any purpose in my opinion. Major or Minor upgrades only.