Having recently bought a 2015 KIA Soul SX with the 18" tires I am wondering if a 16 or 17" tire would be okay for Winter Driving as the 18" Tires are too expensive and the choice is fairly slim so anyone with a 2014 or 2015 have advice for me ?
There have been other threads about this question with very detailed answers that even got into the mathematics and physics of the question. Search them out. There's some interesting information there.
The short story is that yes, you can indeed use smaller wheels and taller sidewalls for your winter tires (and your summer ones, for that matter, if you like). In fact, the "wheels small, sidewalls tall" argument is especially true for winter tires because the sidewalls will help absorb the shock of bumps and other hazards hidden under the snow, maintain better traction in uneven surface conditions, and dampen driver input a bit (which is a desirable thing in the winter).
The handling, however, will be different; so take some time to drive around and get used to the difference after the seasonal switches, at least the first times.
In general (and here's where the math and physics come in), smaller wheels with bigger tires will provide a much smoother ride, better fuel economy, less stress on suspension components, and less perceived noise and vibration (because much of it is absorbed by the sidewall). On the downside, they also increase understeer tendency, reduce cornering stability in high-speed turns, and result in a less-nimble handling "feel" because the sidewall dampens driver input a bit.
For the way I drive my Soul, the advantages of small wheels / high sidewalls outweigh the disadvantages, so I use 15-inch wheels all year. I have separate summer and winter wheel / tire sets, but they're all 15's. I also suspect that for the way most Souls are driven, by most people, most of the time, the main advantage to low-profile tires is aesthetic. Many people think they look "cool." It's kind of like playing dress-up for cars: Put a set of low-profile tires on and pretend you're a race car.
As for alloy versus steel, steel wheels are better for winter tires, hands-down. They're cheaper, less likely to bend, and almost impossible to crack if you hit a hidden pothole. They also increase the unsprung weight, which in turn lowers the car's CG and results in dampened acceleration and less-nimble handling. These would be negative things in the summer, but in winter driving they're actually advantageous because they dampen both acceleration and the driver's tendency to over-control, and therefore can reduce skids.
On the downside, you'll also lose a bit of fuel economy with steel wheels because of the greater unsprung weight; but I've found the difference to be very little on my Soul. It's less than the ordinary variations that I get from tank to tank. Also, if you move down in wheel size, the lighter unsprung weight from the smaller wheels will offset the fact that they're made out of steel.
I purchased my 2014 ! in Nov 2013. The stock tires were 235/45R18. At the time of purchase I requested they exchange the wheels and tires with a new 2014 base model with 205/60R16 tires. The dealer agreed since I was trading, (in their opinion) "down". No regrets so far. Handles good in snow and rain and nice and smooth and quiet on dry roads. Also I personally prefer the looks of the bigger side walls and base model 2014 wheels. The tire circumference was two inches less but the dealer reprogrammed the odometer so it reads the proper MPH and mileage. Still have the stock tires but am looking forward to saving $$ on the cheaper 16 verses the 18 in replacement tires.