Upgrade small-screen phone to Ice Cream Sandwich?
If you are getting ICS update from device manufacturer, its Ok to upgrade. It'll be usable on small screen because you'll not get bare vanilla ROM.. Manufacturers put their own skins over it.

So, if Sony Ericsson is pushing upgrade to Xperia Mini, their custom skin would take care of usability.

Other than this, you will get performance boost with ICS upgrade. There're other benefits, too. So, I'd recommend you to upgrade. Best of all, would you like to be out-of-date?