If the scalable VLEN is the same as the ALU width, which should generally be the target, small vectors would still perform optimally.

Of course if you need less than a VLEN-sized vector you're wasting throughput, but that applies just as much when using 128-bit vectors on AVX-capable hardware, and even worse so on AVX-512-capable (which, while double-pumped or equivalent to some extent on most impls, still has 512-bit-exclusive throughput on most).