You want to run the highest temperature thermostat you can and still keep the engine cool under all conditions. A 195 would be my first choice, but may present cooling problems. My next choice would be a 180. I would never run a 160. If it can't be kept cool with a 180 there's something wrong or mismatched in the system.
Why is hotter better? Two reasons, first, the hotter the engine runs the less wear it endures. Engine wear is not linear based on temperature its exponential, so running an engine say 20 degrees cooler doesn't make a seemingly insignificant increase in wear, rather wear actually doubles, meaning the engine wears out in half the time.
Second, engines make more power the hotter they run because the fuel is atomized better. Ideally you'd want the fuel literally vaporized, but that takes all kinds of trickery beyond what we're talking about here. This increase in efficiency is one of the reasons why automakers went to higher temperature t-stats when emissions compliance became harder and harder to meet. Efficiency is also power, because what was formerly wasted is now recaptured and put to work spinning the crank.