I have bikes with both 650's and 700's. My road race bike has 700's, my tt bike 650's, my winter bike 650's. My advice - forget about the wheel size and first and foremost find a bike that fits you well. My experience has been the opposite of Tri Girls. My 700c wheel bike fits me the best and I am fastest on it, though I am closer to your size - I am 5' even. My winter bike is no slouch - its a nice light ti frame and try as I might, the geometry is just that little bit different than my race bike and I cannot produce as much power on it. (I'm the longer legged, shorter torso'd variety of short person )

As you've noted getting a good tt position isn't really possible for us shorties on bigger wheels, so yes my tt bike has 650's on it, even at that I don't have a lot of saddle to handlebar drop.

As far as having to spin more on a bike with 650's - its all about gear ratios. If you take into consideration your wheel size when you set up your gearing you don't have to have any different gearing than anyone else and you won't necessarily be spinning your legs in any crazy fast way.