You will read prior to your trip that renting a small car is recommended in Rhodes. It’s definitely true that a small car can be an advantage when navigating the winding streets and squeezing into hotel car parks. On the flip side, having driven all around the island, having a larger car is not really a huge deal, so go with whatever vehicle type you feel most comfortable with. Street parking is hard to find anyway, and the paid parking lots all had plenty of room for estates and SUVs.
If you need the extra space for passengers, luggage, or even just extra comfort, then go for it! The road journeys between the main stops are also relatively long, and we’d recommend the comfort of a larger car over a smaller one.