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I have a 2004 Mazda Demio, 1.3 Auto. Recommended tyres appear to be 175/65R14.
I will shortly need to replace a couple of tyres, it has been suggested by my service provider that replacing them with 185/65R14 could be a good idea.
What is your opinion?
What advantage is there in a slightly wider tyre?

The 185/65R will leave a wider footprint on the road which can provide improved handling, braking and stability benefits in some cases.

For a vehicle like yours I don’t really see any major benefits to be honest unless you are doing a lot of highway driving over winding terrain.

There would be no disadvantages however, if this tyre size was fitted (if it is an accepted alternative size), so it could simply come down to price.

I note you say a couple of tyres need replacing so hopefully you are not getting talked into replacing all fours tyres for the wrong reasons.

Are there not problems when moving from one width to another? Does the diameter of the tyre not increase slightly therefore affecting the speedo reading?

It does affect the tyre diameter and therefore the circumference. The tyres will rotate slightly less at a given speed than with smaller tyres, but the difference is so minimal, I wouldn't worry about it too much. Usually your speedometer would show a bit higher than your actual speed anyway. The difference between the two tyres is about 3% (=3 kph faster than now on 100 kph speed).