What's the best Verizon Android phone w/ a small screen?
The best Android phone on VZW with a screen that's 4.3" or smaller is probably the Motorola DROID RAZR M. You do sacrifice a bit on screen quality and sharpness, as well as camera quality, but both are acceptable, especially given the $99.99 price tag (which I think has actually been discounted to $49.99, but don't quote me on that). It is a really nice phone, with great battery life and performance, and it's quite compact as well - Motorola says it is as big as the Apple iPhone 4S.
If your wife wants a sharper, HD screen, then the Motorola DROID RAZR HD and RAZR MAXX HD are also legitimate options, as they're quite small for devices with 4.7-inch screens, but they are by no means small - not much smaller than the Samsung Galaxy S III, in fact.
However, if it's Android she wants, here are some suggestions:
Samsung Galaxy Stratosphere II
Motorola Droid Razr
Motorola Droid Razr M
HTC DROID Incredible 4G LTE (if she liked the older one, why not the newer one? :P)