We defaulted to the lowest flap setting. $$$$ Lower engine stress and fuel burn while accelerating to clean configuration. I think it actually defaulted to the lowest N1 setting, which typically was the lowest flap setting.
I don't think you get increased margin over stall speed. I think it's x percent above stall speed regardless of the flap setting.
You typically get improved climb performance in case of an engine failure.
Trading to increase one area penalizes another. Different companies stress different areas. We went for lower engine stress, less fuel, better climb performance, better initial s/e performance, at the expense of V speeds, runway used, and tail clearence on rotation.