I have recently been looking into setting up my 91 r32 gtst
with a set of large wheels ( for flush fitment under a Bee R
r32.4 style widebody kit ). My question is does a bigger set
of wheels (18x9.5 in front, 18x11.5 in behind) = more or
less traction. I always thought more rubber on the road =
more fricton = more traction. But recently a family friend
brought up the fact that overly sized wheels can make a vehical
"float" as in a gts-t there is very little weight over the rear of
the car, which may cause sudden loss of traction on a bumpy
road or in wet conditions ( And New Zealand has many bumpy
roads and plenty of rain). Could somebody please help me out
here

Wider tires can hydroplane easier, but for the question of producing more grip. A larger contact patch will create more traction. What you're family friend might be talking about is what happens on an improperly set up suspension. A lightly sprung car and a heavily sprung car will have a tendency to produce less grip as the suspension will either let the car roll too much (lightly sprung and damped) reducing contact patch as the wheel changes camber and toe characteristics. If the suspension is too heavily sprung, the tire can leave the ground as the suspension just won't be able to fulfill its design properly. Suspension tuning is all about understanding what your car needs for the conditions it's being driven in.

If you want some good articles to read regarding suspension, I suggest:

Sport Compact Car's "Make it Stick" series by Mike Kojima This was originally run in Sport Compact Car magazine, but is thankfully hosted on Modified's site now that SCC is no longer. Kojima is a chassis engineer who's been working on Japanese imports for a very long time. Man knows his stuff.

MotoIQ's extended series on suspension design by Mike Kojima Not to hump Kojima's leg, but he has written the best guides to suspension design I can find on the internet. They're by no means the end all, say all, but for the average gearhead, you can definitely take a lot away from his words.

Without going over surface temp, surface make (concrete, asphalt), size vs wheel size, tire temp, alignment, suspension geometry, damper settings, swaybar diameter, etc, the best answer I can give you is compound. Compound/groove cut can make all the difference. Most of your run of the mill summer tires are going to be terrible in rain for the most part. One particular tire that comes to mind is a Hankook RS3 which is atrocious in the rain. Fact of the matter is, when conditions suck, slow down...

A lightly sprung car and a heavily sprung car will have a tendency to produce less grip as the suspension will either let the car roll too much lightly sprung and damped reducing contact patch as the wheel changes camber and toe characteristics.