I know the XL has better battery life but I have smallish hands so I don't know if that would be bigger problem. Also I have a DS Lite so how much could I get by trading that in?
Two main factors apply whether or not to get a 3DS or XL. The first is whether you're likely to carry it with you everywhere. If you probably would, I would consider a 3DS, if you're more likely to play it at home a lot, you should get an XL. Another factor is, as you mentioned, the battery life.
Also, it doesn't matter if you have small hands. The surface area of the XL is larger, yes, but the buttons and C-Pad are roughly in the same place as a regular 3DS.