Channel with URLs based on entry type
I would make this decision based on what makes the most sense for the client. You can realize both solutions on a technical level, so it's really just a question about the preferable CP user experience.

For me this sounds like "Big News" and "Small News" are quite similar, so I'd probably like to have them combined in a single channel. And your template conditional is a good way to handle the manually (accidential?) typed in URLs.

You could even add a dedicated source for the entry index views by making use of the modifyEntrySources hook and some lines of custom plugin code. See this Stack Exchange Q&amp;A for how to do this: Filter entries by entry type in the CP?