Not really sure but I've noticed that .223, or 5.56 is a little finicky, if you go below 20 inches the balistics pretty much get shot, the 14.5 inch M-4's arn't bad but thats as short as I would go and even thoughs balistics suck, read the reports the millitarys really starting to bitch about that, it's not bad at short ranges like what the weapon was desighned for but once you get out to even modestly long ranges the balistics are terrible keyholeing lots of stuff, and lately it seems a dissproportunet number of M-4's have been issued just not a good choice for desert warfare where the ranges are relateivly long even the A2's have issues at that range to say nothing for the M-4's, once you get shorter than 14.5 inches the balistics go from bad, to worse, to terrible, basicly the shorter the barrel the shorter the range, theres also a steep drop off in muzzle velocity....
As for the M193 yes that would be the better choice once the barrels start to get shorter the shorter, and lighter the bullets the better, basicly this is the identical same issue as useing M855 in an M16A1 the twist rate is to slow so the bullet doesn't have time to stabalize causing it to keyhole and print about 2 foot size groups at about 100 yards, well with the shorter barrels it's the same issue only this time the twist rate is right but they still don't have time to stabolize do to the short barrel length, even worse if your useing a slower twist rate....
As for the XM-8 it all depends on the barrel if they use the same twist rate there using now than the ballistics will REALLY suck, but if they adjust the twist rate to a faster rate it should work, basicly your comensateing for the lack of barrel length by increasing the rate of twist for example an M-16A2 has a 1:7 twist rate, and a 20 inch barrel, useing that a bullet will turn JUST under 3 times (7x3=21, so it's 1 inch short....), if you cut the barrel length in half to 10 inches the bullet will only turn about 1.5 times, to put that into perspective the M16A1 will give you about 1.6 times, so assumeing your useing M855 it would be even less accurite than if you used it in an M-16A1, and I already mentioned how poorly that does, so effectivly your maximum effective range is now about 100 yards, however if you adjust the twist rate to compensate for the shorter barrel you can compensate if you used say a 1:3.5 twist rate you would get the exact same number of rotations as if you had a 20 inch barrel so that short 10 inch barrel will theoreticly be just as accurite as an M-16A2, however you still would experiance some degredation of accuracy, and less stopping power because the shorter barrel would develop much less muzzle velocity than the longer barrel, so if the new XM-8 has an appropriate twist rate it can still be quite effective with a shorter barrel....
As far as which version the DOD would use thats essentually what there doing now front line troops get the M-16A2, while the rear echelon gets the M-16A1 though in this case do to the number of M-16A2's the number of M-16A1's in vary small you may have noticed some if you've been to the airport recently.... If the millitary adjusts the rate of twist they won't have to use 2 differant kinds of ammunition as both will be able to use M855 vertually just as well as the other (well actually they might need to develop a new bullet for the shorter barrels as the M855 wasn't desighned for such a high twist rate as I mentioned....), however if they use the same 1:7 twist rate there useing now then yeah thats probably what they would do as M193 out of a 10 inch barrel in 1:7 would have nearly the identical balistics as one out of the 20 inch M-16A1 with the 1:12 twist rate, and they could just keep useing the M855 for the longer barreled versions....
To summerize in order to compensate for a shorter barrel you must eighther use a shorter lighter bullet, or increase the rate of twist....