As a writer, I've seen what readers prefer shift. They seem to prefer shorter stories, and are not so much looking for the long ones. I love long stories like Dejla's 'Kindness of Ravens' and the just finished 'Simple Gifts', but most fic I come across these days is of the shorter variety. Granted, I don't read nearly the amount of fanfic I used to, but the amount I do read seems to run to the short story length.
As for which I prefer to write... I think the story is as long as it wants to be [g] I've started stories that I think will be shortish, and then they turn into epics. That's what happened with 'I Remember You Not Fondly'. When I started it, I had no idea it would become the longest thing I'd written in ten years! There's just no rhyme or reason to it.