No offence to your friend, but he is doing a business and you know how a business runs. There are many who will say anything to seal the deal, but only some of them will give correct advice.
I am not saying he is totally wrong, because if the weight of the alloys is less (which it is in most cases), they will compensate for the decrease in mileage by wide tyres. But one needs to calculate small perimeters before arriving to a conclusion.
As FordFiesta1.6 said, Swift's light steering is a boon (I had a Dzire) in city traffic and going for 205 (straight from 165 section) means that you will 100% find the steering to be tighter/harder to turn. That I can bet.
Regarding the mileage and acceleration, the decrease would be very marginal and would often go unnoticed. Wider tyres give wider contact patch and produce more friction as they push against the road to move the car forward. Result is that you will have to revv a bit more (not noticeable unless you keep an eye on RPM) to do the same speeds which you managed in stock setup. As a result, mileage decreases. Acceleration decreases as you will be attempting to move wider (grippy) tyres with the same engine. Simple it is, but not worth considering as the difference is very marginal. Still 195 section would be a better bet overall, comfort and grip wise. If you do trips with 4 or 5 passengers very often or you travel on bad roads very often, it is better to go for 195 section.
After all, the
look which you will get after you walk away (after parking) will make up for the
dukh you will get while turning the steering.