A dread is fine for fingerstyle as evidenced by all the people that play fingerstyle on dreads (including myself for many years). That said a smaller guitar, if made well (certain ones style themselves as "fingerstyle" guitars - perhaps due to lightness of build, string spacing, ect) will have a better balance bass to treble, a quicker response time, and for many people will simply be more physically comfortable to play (especially when sitting, which is what most fingerstyle players do most of the time).
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Derek Coombs
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Guitars by Mark Blanchard, Albert&Mueller, Paul Woolson, Collings, Composite Acoustics, and Derek Coombs
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