A little bit of the (nicely described) methods in Shen et al. 2014 ("Decoding the individual finger movements ..." citation below) caught my eye: they report better results when concatenating the images from adjacent time points instead of averaging (or analyzing each independently). The study was straightforward: classifying which finger (or thumb) did a button press. They got good accuracies classifying single trials, with both searchlights and anatomical ROIs. There's a lot of nice methodological detail, including how they defined the ROIs in individual participants, and enough description of the permutation testing to tell that they followed what I'd call a dataset-wise scheme (nice to see!).
But what I want to highlight here is a pretty minor part of the paper: during preliminary analyses they classified the button presses in individual images (i.e., single timepoints; the image acquired during 1 TR), the average of two adjacent images (e.g., averaging the images collected 3 and 4 TR after a button press), and by concatenating adjacent images (e.g., concatenating the images collected 3 and 4 TR after the button press), and found the best results for concatenation (they don't specify how much better).
Concretely, concatenation sends more voxels to the classifier each time: if a ROI has 100 voxels, concatenating two adjacent images means that each example has 200 voxels (the 100 ROI voxels at timepoint 1 and the 100 ROI voxels at timepoint 2). The classifier doesn't "know" that this is actually 100 voxels at two timepoints; it "sees" 200 unique voxels. Shen et al.used linear SVM (c=1), which generally handles large numbers of voxels well; doubling ROI sizes might hurt the performance of other classifiers.
I haven't tried concatenating timepoints; my usual procedure is averaging (or fitting a HRF-type model). But I know others have also had success with concatenation; feel free to comment if you have any experience (good or bad).
Shen, G., Zhang, J., Wang, M., Lei, D., Yang, G., Zhang, S., & Du, X. (2014). Decoding the individual finger movements from single-trial functional magnetic resonance imaging recordings of human brain activity European Journal of Neuroscience, 39 (12), 2071-2082 DOI: 10.1111/ejn.12547