Also, please lets get the misconception that longer boats are faster, out of the way. This only applies to displacement vessels whose length to beam ratio is less than 7:1. Any boat worthy of being called a surfski has a ratio of well over 12:1.
I don't think that what you are saying here is quite true.
The speed of a displacement hull is primarily governed by two things:
#1. Friction resistance (proportional to the wetted surface area)
Reducing friction resistance is very simple because you must simply reduce the surface area of the boat that is underwater. The optimal shape with respect to surface area is a half sphere. With regard to a typcial surf ski, you can reduce friction resistance by making the boat shorter and by making the bottom more rounded (optimally, it will have the cross section of a half sphere).
#2. Wave resistance (roughly governed by the length and pointy-ness of the hull
Reducing wave resistance is also very simple. Make the boat longer and more pointy.
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As you can see, the two goals run somewhat against each other, so boat designers have a challenge of striking the right balance. If you make the boat too short, it will have a lot of wave resistance. If you make the boat too long, you will have too much friction resistance.
To make things more complicated, wave resistance increases somewhat exponentially with increasing hull speed, wheras friction resistance increases in a more linear manner. This means that at different speeds, the ratio between friction resistance and wave resistance changes--so a hull that is optimal for sprinting at over 10 MPH will not be as fast at 7 MPH as a boat designed optimally for 7 MPH. Also, for the same hull, the ratios will be different depending on the weight of the paddler (plus the weight of the hull)--so a boat designed optimally for a 200 lb paddler (at a certain speed) will not be optimal for a 150 lb paddler.
The 21 ft, 17 inch wide surf skis are generally designed for heavier racers paddling at very high speeds (8+ MPH). I agree that making these boats longer is likely not going to make them faster (a longer kayak has been made--the X-Par missile--and it is not proven successful). However, making them shorter will definitely make them slower for their intended occupant.
A lighter paddler would likely benefit from a shorter hull (witness the 18.33 ft Huki S1-A, designed for <150 lb paddler). A paddler intending to cruise at slower speeds would also likely benefit from a shorter hull (proportionally less wave resistance at lower speeds means that friction resistance is relatively more important).
For a given weight, a given speed, and a given hull shape, there exists an optimal hull length. For most surfski racers, that optimal length is somewhere near 21 ft--any shorter and the boat will be slower, but any longer and the boat will also be slower. In that sense, the "longer is faster" is a myth..
However, a typical elite surfski racer, the current elite boats are very close to optimal. In the range of available boats, longer really does equal faster. The reason why elite racers use 21 ft boats instead of 19 ft boats is because the 21 ft boats are faster--and there aren't many boats out there longer than 21 ft. In that sense, the "longer is faster" is not a myth.
Obviously, you are coming from having the experience of a 17ft K1 being more effecient at 7 MPH compared with a 21ft ski. However, if you could take your 21 ft ski and shrink the width so that it is as narrow as the K1, I think that the tables would likely be turned (depending on your weight of course)--particularly if you were paddling at 8 MPH rather than 7 MPH. (I say this realizing that I personally can't hold 8 MPH long.)