I was mistaken, we switched to one-week iterations several weeks ago and they worked much better than two-week iterations. We naturally feel the progress. User stories are smaller, development is highly focused, bug fixing is not a pain. One-week means five-days iteration in fact. The scheme is simple (day-by-day):

What benefits we have?

• Planning is terribly simple. You just get several user stories from backlog and ask each developer what user stories he will be able to complete during 3.5 days. Since time frame is short, it is quite easy to estimate a real possible effort.
• Progress Tracking is no-brainer. You even don't need burn down chart for 5 days. Task Board works just great and we found daily progress table especially useful for such small iterations.
• You have quite stable build every week. Something to show and demonstrate the real progress.

The main problem is organize QA. In most companies QA working with ready build when all development is completed, in agile environment and especially in one-week iterations environment it is not possible. QA have to test completed user stories in running iteration, that is a hard process. But this problem isn't a show stopper and so far so good.