I do agree that small guns in general seem pretty weak even vs lightly or unarmored targets.
with that being said, no small guns shouldnt be able to be used en masse to defeat armor.
the ADVANTAGE of the smaller ships historically, which hopefully will come out in the campaign version of the game, is cost:
so taking the Iowa vs Fletcher example: 1 Iowa class battleship costs as much to build as 16.66667 fletcher class destroyers. Also takes much longer to build, can only be built at a big ship yard, etc. Which probably explains why the USA only ended up building 4 Iowa class BBs compared to 175 fletcher class DDs
If anything, they need to add the major historical drawback to torpedo deck-mounts and thats torpedo ammo detonations.