If you use a very good lens I think you should avoid apertures smaller than 16. At 16 the loss due to diffraction would be unsignificant, I think. There are essentially two reason to use small apertures:
1) To increase depth of field
2) To increase exposure time (like photographing water)
The limitation is not because the small sensor, but because of the resolution in the sensor. There would be a similar limitation on the Canon 1Ds III (assuming 25 MPixels) but somewhat less on a Canon 5D with 13.5 MPixels. You would need to close aperture a bit more on a full frame camera to achieve the same depth field, so you gain some and you loose some.
Decent lenses have peak performance somewhere between aperture 5.6 and 11, best aperture is normally about two stops down. As far as I understand the lenses you have should be quite "decent".http://www.photozone.de/8Reviews/lenses/ca...56_is/index.htmhttp://www.photozone.de/8Reviews/lenses/ca...0_4is/index.htm
The tests above indicate that maximum sharpness is achieved at 5.6-8 rather than 11. That is very good. These figures do only apply to the plane of focus. using a smaller aperture you perhaps don't achieve maximum sharpness (in the plane of focus) but overall sharpness may be better. I wouldn't go beyond aperture 16 (or maybe 22) for optimal sharpness. Aperture 32 is bad anyway, so bad that it is hard to miss!
Canon rebel xti-am I limited to shooting f/11 or less because of my small sensor size? If this is true, what other limitations does the smaller sensor place on the shooter? I have a 17-85mm IS and a 70-200 f/4 ISL.