There is a natural maximum in squad size. I have been tracking Claim Jumper active membership for a while now. In the last 14 tours, CJs active in a given tour ranged from 86 to 106. To maintain such a mass, there has been a lot of new guys, and a lot of turnover. There have been something like 300 people active for at least one tour. Only 19 have been active in each of the last 14 tours. I agree that we can consolidate down to fewer wings, but it doesn't really affect anything, gamewise.
In my opinion, the natural upper limits to a squad size are the limited number of 'serious' players who will stick with the game, the diminishing access to the squad frequency as more guys log on, the inevitability of internal conflicts, and the inability to develop good wingman tactics. Of all the CJs, I can count on maybe three to be reliable wingmen.
Large squads are not the best answer. A good tight squad is a better force multiplier.
With all of this said, I am a CJ as long as the squad exists. I chafe at the arrogance and clique-ishness of many of the squads out there.