Small engines are good enough for city driving. It may even give you better fuel economy, specially in traffic jams.
But for highway/motorway driving or on hilly areas, a big engine is a must. I am saying this from experience of driving a lot on motorways, like 11 to 12 hours of driving. You need torque when the vehicle is fully loaded or on hilly areas. Then power is important when overtaking at high speeds like accelerating from 100 to 110 or 120. With small engines, it takes forever to overtake.
1.5 City has the best in class engine when you consider performance numbers, power-to-weight ratio and 0-100 time. This is the major reason for its success in India and Malaysia. It's most loved B-Segment sedan in those countries.
Keep this in mind. 1.5 engine will give you better fuel economy on speeds above 100kph. Below that 1.2 engine will have an edge. Specially in traffic jams.