I think there are many downsides to retractable leashes and not many upsides. The first thing that comes to mind is that you're not promoting good behavior in your dog. I want my dog to be right by my side when I have her on a leash. There is nothing I want her doing away from me, and that includes sniffing around. I've said in other posts that a dog has a wonderful sense of smell and they can smell most of the things from beside your leg as they can by walking over and sniffing them. If I don't care that my dog runs around and sniffs, I wait till I have good voice command and let them off leash.
You're also creating a two fold tripping hazard. I can't tell you how many people I've seen, go to step over one of these for whatever reason, only to have the dog run around and trip them onto their face. If you ever have to cross a line like this, use the sled dog method and step on the line with one foot. The other side is that your dog often gets yanked on at the same time, very roughly.
The more mechanisms that any object has, the more prone to failure it is, if you have a leash on, you don't want failure. The cord is also very thin and if it doesn't break or fray, then you run a very good risk of getting rope burn from a dog that pulls. The less surface area there is to a leash, the more pressure it puts on one point on your hand.
As a couple of real world examples, I was in the vets office a few months ago, getting my yearly shots for my two dogs. I had both of my dogs right at my feet. Something that never fails is that people want to let their dogs sniff my dogs at the vet. These dogs will never play with one another or socialize in any other way. Best case scenario is they're friendly. You're also running the risk of a dog fight for no good reason. I'd just finished asking a lady who was trying to do this to please pull her dog away, when I looked across the room and saw an elderly couple with a terrier mutt on a retractable leash. They sat and looked right at their dog as he ran across the isle, under a set of seats and attacked a dog that was lying there behaving. They laughed like he was playing. What upset me almost as much was that a nurse saw it and didn't say anything.
One more instance where having a retractable leash fail would be terrible is a situation with my aunt and her Pomeranian. She has him at the beach and she was lying out on the beach with her eyes closed and his regular leash wrapped around her wrist. She felt a pulling and looked up to see a german shepard with her dog in it's mouth, trying to pull him away. Luckily the owner tackled him and they got him out. He was fine after some stitches. He also had an owl try to carry him off once as well and dropped him when it hit the end of his tie out. Basically, he needs to quite giving off a snack vibe, but that's another problem.
So these are a few of the reasons I prefer a 1-2" wide and 6' long leash. For a little dog, you can go to the local supply store and buy a good bit of colored paracord, that's light weight and has a 550' test to it. You can make a nice light weight, but strong lead.