The Kilo is not really big if you consider the fact that it is double-hulled, so effectively, it’s only a wee bit larger than the Type-209 (in Indian service) and Scorpene. For a larger sub, the Japanese Soryu and the Australian Collins are better comparisons.
About being less capable the Scorpenes has registered many sales- Chile, Malaysia, India, Brazil and counting. So it’s not too bad.
The difference isn't size, it's the difference in performance between the Scorpene's Thales fire-control system and its American counterpart, the AN/BYG-1 installed in Virginias and some Collinses -- which is why the latter have such bulbous bows.
I'm sure the Scorpene is a serviceable submarine, and perfectly adequate for navies that occasionally need a submarine. People who can afford better, drive Kockums boats -- or American nukes.
For the minority report on the American fire-control system in Collinses, you might want to see this page (pardon the cold link):
http://tinyurl.com/p4toq7y