@Autoenthusiast, here is the link from Bridgestone India that recommends increasing inflation pressures by 5 psi over manufacturer's recommendation for high-speed driving:
Bridgestone Tyre, Indian Tyre Industry
Click on "Be a safe driver" and read the pop-up window. However, if you are going to follow this recommendation, be sure that you set your pressures accurately. Otherwise if you set your tyre pressures at 35 psi and if there is an error of even 2-3 psi, it could take you dangerously close to the upper limit, which is 40 psi for my S322 tyres; if the upper limit for your tyres is 44 psi, then you need not worry. If you raise your tyre pressures, you will lose out on ride quality, but you will get better handling and pick-up (and mileage too, according to Chris Longhurst; see his tyre bible). There are many websites which recommend an increase in tyre pressures ranging from 3-5 psi for high-speed driving.
Coming to your other question, the only reason you would want to upgrade to wider wheels is for increased performance, especially in high-speed cornering. If you are already satisfied with the performance of your stock wheels in this respect, there is really no need to upgrade, especially if your stock steel rims are in good condition and relatively new. The stability is already increased in your case because of the wider 165 tyres, even with stock wheels. If you do want to upgrade, there is absolutely no harm in doing so provided you choose your alloys correctly (don't upgrade to wider steel rims; they are heavier and anyway alloys are better for tubeless tyres). You can go by Samurai's experience for the Xing and choose the same alloys or one with similar specs. These I think are a good match for the Xing as per Samurai --you can PM him for further details (I am not aware of the specs for the Xing rims, which are different from my old Santro's).
In my case, I have upgraded to 5J alloys (as compared to 4J stock wheels). Further, these alloy wheels have an offset that is 20 mm less as compared to the stock wheel. So if my alloys were 4J, they would still protrude out of the wheel well by 20 mm as compared to the 4J stock wheel. But since they are 5J, i.e., 5" wide, they will protrude out by an additional 1/2 inch, so totally my alloys protrude out of the wheel well by 33 mm as compared to the stock wheels. One advantage of this is that the car has a wider stance and so one gets appreciable increased stability in cornering. But against this, you may have several problems; there may be fouling with the wheel arch on full turn, the car body work will get dirty due to the spray from the tyres (especially in the monsoon season), plus the decreased offset may affect steering/handling and reduce the life of the wheel bearings, which will be subject to additional stress due to the difference in offset. In my case, fortunately steering/handling is still excellent (as good as before, if not better). I just managed to avoid the fouling problem with stock-size tyres (had to remove the mud flaps). But upsized tyres will foul with the inside of the wheel arch on full turn. Don't know about bearing life -- need to observe this over the next few months.
So overall, I would guess that 4.5J is ideal for my Santro, but unfortunately I couldn't find a single shop with 4.5J alloys, neither are they available with the prominent Indian alloy makers (Aura and Neo). You may get imported alloys, but they are expensive and getting a suitable match for the Santro might be difficult.