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I believe your assumptions are correct on playing time helping development. I don't think having 60 players hurts the development of the players that are actually playing.
The only roster I run over 30 players is rookie ball with the rest running at 30 players for a small cushion. It's not unusual for me to have 40ish players at R level as I try to give them 3 seasons to see where they go. Having said that I do cut out the 20/20 guys if the roster is getting too big.
While my other minor league clubs run at 30 players I also use ghost players to fill in and cut down on micromanagement. So while I have a limit of 30 players on a team it's not unusual for me to have a roster running at 25ish. The least amount of players I will have is 10 pitchers and 12 batters for a total of 22 and let ghosts play if needed.
Also there is a setting to tell your coaches to use players based on potential rather than current ability. I always turn this on and have my minor league managers playing the guys with potential. In the case of a large roster this should at least make sure the right guys are seeing the field.
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