Extensive wind tunnel tests in the late 1920s and early 1930s pinned down the effect of biplane wing gap. Gap to span ratio is more useful in determining the effect of gap on induced drag, but I reduced some of the best figures to aspect ratio 6.0, then related induced drag to gap/chord ratio at this typical aspect ratio.

Reducing gap/chord ratio from 1.0 to 0.7 will reduce maximum lift coefficient by 4.9%, increase induced drag by 7.6%, and increase minimum wing profile drag by just under 1% for thin airfoils, but considerably more with a 15% thick symmetrical airfoil. It would probably be best to accept the slight weight penalty of keeping the gap about equal to the chord (a good all-round compromise), unless the airplane is intended for top level precision aerobatics and a lower drag center is absolutely necessary.

I have found by experiment that adding span while keeping gap constant greatly helps to reduce induced drag - high induced drag is a serious bipe bugbear, and increasing span helps almost as much as it does in a monoplane. Monoplane induced drag is proportional to the square of the span, so increasing span by a measly 10% will reduce induced drag by about 19% in a monoplane, and about 17% in a typical bipe. I would highly recommend increasing the span a bit, but be sure to increase the vertical tail area by at least the same proportion, since longer wings produce higher yawing moments, and thus force the vertical tail to work harder down near stall.

Actually, it would probably be helpful to increase the vertical tail area even more, since nearly every bipe I have flown could have benefited by increased vertical tail (fin and rudder) area. The Ultimate is an excellent example of a bipe with sufficient vertical tail area, although it could benefit a lot from less induced drag by using higher aspect ratio, tapered wings.

Frank Courtney, renowned WW2 era experimental test pilot said, "I have never flown an airplane that has enough vertical tail area."

Reference: Biplane Secrets, by Carl Risteen, from Air Age's "How To's", Vol. 2 - available through hobby shops and bookstores.