You're right, Carl, too large and the bottom end/midrange suffers a little (you'll see a slight reduction in mileage as well), although with the inherent torque of a 2 liter you may never really notice it. On just about any discussion about exhaust tubing size on the Samba you'll get some yahoo piping in with " 1 5/8 is great on my 1679" or "1 3/4 on my 1915 is perfect!", and yeah, it does run fine. What they don't understand is the trade off (or maybe they just don't care); for the little bit of top end they may (note the word "may" as depending on the combo there may be no top end hp advantage at all) be getting, where they spend 95 or 98% of their time driving could be that much smoother and economical, and the power will come on at a much lower rpm as well.
And Danny's correct, according to the Hot VW's header size chart by Jim Beahm (see below), 1 1/2" tubing is the perfect size for a 2 liter-2110 that makes power to 5500 or 6,000rpm.
With that said, Pat Downs (CB Perf.) mentioned in another thread here a while ago that engines can often step up one size when using an exhaust system with longer primaries- the discussion was about what size tubing for a sidewinder, which has longer primary tubing (38 or 39") than most headers.