Until recently, the BS34s were always considered the black sheep of the XS650 carb family. Too lean from the factory, E.P.A. strangled, and harder to tune for mods. The major problem was that fixed needle that allowed for no midrange adjustment. That's all changed now with the availability of adjustable needles for these carbs. Over the next few years, they may even emerge as the preferred choice for these bikes.
They do have some advantages over the 38s. They're a newer and more modern design and they are also lighter. They also have that removable air jet for the pilot circuit which gives you another way to fine tune it.
Yes, a smaller carb is supposed to give better low and midrange performance. My buddy has 2 BS34 equipped 650s. I've ridden them both and really found no difference in performance compared to my BS38 equipped '78. They certainly don't run any worse.
Your '77 carbs are very strong in the midrange. They had the largest needle jet (Z-8) ever installed in a 38. They suffer a bit on top because in order to run that large needle jet, they had to install a smaller main (122.5). In fact, that was the smallest main ever put in the 650. In some markets, that carb set came with an even smaller 117.5 main.
So, if you like to tinker and have an extra $80 to $100 to blow, you might want to give the 34s a try. You'll need new manifolds, air filters, needles, and some jets. Once set up properly and dialed in, you may just like them.