Bigger tires = higher to end speed
Smaller Tires = More low end tourque
If you have a 4 speed which maxes out pretty low on the highway, adding bigger tires will boost up your maximum Mph. In which could save you some mpg's.
Putting smaller tires on it will lower your miles per gallon, and raise power and torque. Because the fact that is it will be easier to turn the tires around, but when you get on the highway you are going to be running at higher Rpms because in order to get up to speed your engine has to turn the smaller tires around alot faster, in which once at highway speed, larger tires are going to be easier to turn and lower rpms at higher speeds.
I could be wrong feel free to correct me.
I have 31" tires on my truck and i get roughly 18-19 mpg, as for speedo being off, i guess the guy that had the truck before me could have adjusted it but i dont think so and mine is dead on, but i dont know how much you can go off me cause i have the 4 speed auto with overdrive and it still wont hit 65 on the highway with 31's so you guys are all lucky if you can hit that will 33's.