Probably so... The absolute top of the line cards will probably always be fairly large and power hungry, but if you look more towards the mid to mid-high end you can find great cards that aren't enormous. Look at the 7900GT or 7600GT for example, both are nice performers for their class, and not too big. I just don't think that if you want smaller cards, you can do the newest, highest performing card. I would say give it about a year or two before you will see a truly small card that performs as well as an 8800GTX.
As a side note, the biggest cards haven't really been getting bigger at the crazy rate that some might suggest. The 8800GTX and the 7950GX2 are the first cards to really expand on the size in a while. The 8800GS, 7900GTX, and X1950XTX are not really any bigger than a 6800 Ultra or a 5950 Ultra, both of which came out years ago. ATI made a big jump though, since the X800's were all a lot smaller than the 6-series, but the X1k cards aren't any bigger then a 5950 Ultra either.