In the early days of cycling bikes like penny farthings had an enormous wheel, but the advent of the safety bicycle gave us something close to current sizes. Most bicycles have tires with an outside diameter in the 26 to 28" range. In the past decade a class of off road bikes known as 29ers have wheel outside diameters up to about 29" - sometimes a bit more (it turns out the rim size is specified and then you add the tire - it can get a bit messy)
As a bike wheel spins some energy is put into its spinning - a rotational kinetic energy. While it takes extra energy to get a big and heavy wheel moving, once it is moving it wants to keep moving. This can be very useful when you are on uneven territory, plus the extra size can "flatten" out the rocks.
A few people have played with larger tires. This probably started when specialty tire company Coker made a 36" wheel and tire for unicycles (!) They followed this with a monster "cruiser" bike. Other than their size, they aren't terribly inspiring. The wheels and tires are very heavy, the frame is heavy and so on... But for $700 (and shopping will find lower prices) you will become something of a celebrity with lots of curious questions.
I'd like to see a 30" or so in road or commuter bike with reasonably thin road tires. If someone made a single speed "fixie" at this scale it would probably sell well just because it is so different:-) Unfortunatley it costs about $100k to tool up for a new tire.