I see. Well, in accordance to your thoughts, the flex of the board is affected by the riders weight, not height. On average, taller people can flex the same board as a shorter rider more easily because taller people in general tend to weigh more than shorter people.
But you are totally right about going shorter causes loss in stability no matter what. That is the trade-off. Shorter = more control, less stability. Longer = More stability, less control.