This is a central conflict in transhumanist discussion circles, or at least one on which a lot of ink is spilled. In terms of the way in which transhumanist organizations present themselves to the world, it's something of a moot point. The biggest transhumanist media outlets (like Betterhumans, a sterling site that should be on your favorites list) are fairly middle of the road from the point of view of someone like myself (or James, from the opposite end of the spectrum).
My own personal arguments for small government stem from efficiency concerns, a desire for responsibility and accountability, and an Austrian view of economics and human psychology. I won't ramble on the topic here, but will point you to a good start for further reading on the topic.