I, too, had a KZ400. A '74. What a nice machine. Not particularly sizzling in any area, but a very nice bike. I put ~12,000 miles on mine in a little over a year. 50 mpg, counterbalanced and no issues!
Then, too, they're not really 'classics' yet, but IMO, the pinnacle of evolution of the small cc parallel twin has to be any of the early 80s Japanese 400~450cc twins. They would all run 14-sec 1/4 miles, all got 55+mpg, all were counterbalanced for very smooth running, all had electronic ignition, H4 headlights and disk brakes and all were light and very good handlers. And, with the absolute market/model saturation in those years, you could get 'em in cruiser, standard or 'sporty' flavors.
Me? I'd go for an 82 or 83 Honda CB450T Hawk, Suzuki GS450E or S, Yamaha Seca 400 or a Kawasaki KZ440G1 ('cause I'm not as partial to the cruiser models).
Kirk