Plus One Size tires = poor shifting?

Forgive me if this is common knowledge, but all of the vehicles i have owned in the past that i changed tire sizes on have been manual transmissions. this is my first automatic vehicle in 13 years...

So, i put my stock wheels and tires on my taco sport over the weekend since my dynapros have zero tread left on them. i've noticed that the automatic transmission in this truck shifts so much better with the stock tire size. particularly the 1-2 shift and the shift into over drive. it is so much smoother and less jolting. my other tires are 265 75 16s on scs f5 wheels. we're only talking a 1 inch difference in diameter between that and the stock sport size i think. is this all in my head, or is this something that can actually happen when up-sizing tires? i do like the look of the 265 75 16s on the truck, but if its going to make my transmission shift terrible, i may go to a 265 70 16 which is the same diameter (roughly) as the 265 65 17s on the stock wheels.