That theme looks good. I'd be curious what kind of sites you have built with it. PM me a url or 2 if you want.
While it is possible the keywords in the URL might help a slight bit
in ranking - there is no question it in itself won't get the top ranking and is not as important as the keywords in the domain name.ALSO your keywords are still in the title which is what really does the magic.
A few good links should make up for any boost lost.
I do use a plugin SEO Post Link on my sites to shorten URLs but I mainly do that to prevent LONG spammy out of control long URLShttp://www.maxblogpress.com/plugins/spl/
It has more options on what gets removed if anything (ie 2 characters or less etc. - on/off option for length of words deleted)
It can't hurt to have your keywords (unless OVER optimized) - but the URL itself missing short keywords is not something I ever lost sleep over.
I would tell the theme guy to consider making an option if there isn't already one to let you decide WHAT to truncate.