Having an extra pawn is great, but to win the game you will need a plan for how to make progress. What are you going to attack? How are you going to activate your pieces? 16...Qc7 is not connected to any plan as far as I can see.
You note that your bishop and knight are neatly placed, that it is nice to have the knight defended by the d-pawn, and that c4 might be a weakness. All true, so let's formulate a candidate plan based on these observations: Keep the pawn structure as is, while increasing the pressure against c4 with pieces. Which pieces can do that? Only the queen. So we consider 16...Qd7, aiming for 17...Qa4. But White will be happy to play 17.Nf3, looking to exchange your strong knight. So this plan is too slow.
Thinking about weaknesses did not yield a viable plan, so let's approach the position from the other end: How to activate your pieces? Which of your pieces are the least employed? Obviously the rooks. Activating them is going to be very hard while keeping all eight of your pawns on their original files. Rooks need open or at least half-open files to shine.
That's why opening the position is a logical plan here. Of course this might also lead to your opponent's rooks becoming active, but that is not a problem, because with all the rooks contesting one open file, the most likely result is that they all get exchanged, which would bring you closer to converting your extra pawn in an endgame.
So how can we open the position? The obvious candidate is 16...d5. 16...f6 would not make as much sense, because it would weaken your king and might leave d6 weak later. You are right that 16...d5 17.cxd5 Qxd5 18.Bf4 renders the knight a little loose on e5, but it may then find an even better square, as Ian Bush has pointed out above: 18...Nd3, aiming to create a new outpost with ...c4.
Are there any general considerations to keep in mind when deciding when to open the center?
Yes, in general you should consider opening the center on any of the following cues:
- When you are ahead in development
- When your opponent's king is stuck on a central file
- When there is no other way to activate all your pieces (as in the given example)
- When you have (potentially) weak central pawns that you would like to get rid of
- When your opponent is launching a flank attack