may be I am on the wrong track here but doesn't PSoC 3 use a memory model to address the SFRs that would not work with the small memory model of Keil? The default to LARGE has probably a good reason other than creating LARGEr code.
You can use the Keil small memory model (and compact model and other 8051 features) with PSoC Creator, in a limited fashion. Please see AN60360 for details.
Thanks for the response. Application note is actually AN60630, PSoC3 8051 Code Optimization.