[Jack]

The barrel length isn't the major factor in bullet stabilization (within reason), rifling twist is. Given the proper twist for the bullets being used, the 14.5 inch barrel of the M4 should work as well as the 20 inch barrel of the M16, at any reasonable range.
Velocity will be reduced in the 14.5 inch barrel compared to the 20 incher, with the same ammo.
I spoke about this very thing with a friend of mine who's currently in the Army. His comment was that the M4 is vastly easier to maneuver in and out of the vehicles and aircraft that troops ride in these days- like the Bradley, Humee, and helicopters. That handiness of the M4 would help in house clearing type situations, too.
As far as accuracy, with iron sights like military rifles of old used, a longer sight radius provided by a longer barrel would give, at least in theory, a bit more accuracy than a short barrel....BUT.. they don't use iron sights on US rifles any more. Currently the standard military rifle sight is a red dot type, or holographic sight, or even a scope, where barrel length is no factor at all on accuracy.
The net effect of the 14.5" M4 barrel as compared to the 20" M16 barrel is a little less velocity, so a touch less bullet energy.
Actually, with the enhanced sights, I suspect the M4 is a little more accurate than the M16 in the hands of the average soldier.