I think that once you reach a small enough dimension that the unit will fit comfortably in a shirt pocket (and the Riot certainly qualifies), there is no significant advantage to making it smaller.

I agree, except for the part about the Riot qualifing. Once they have them down to about the size of a watch i don't think they'd be much advantage making them smaller.

All depends on your application i guess.

For me something that is 1.3 inches thick would not fit in my pocket comfortably.

And i hate extra weight in my short pockets that bangs around when i run and tries to pull my shorts down. So saving 110grams is an advantage. I got all my keys recut using those new ultralight italian keys. You could hardly notice the keys were in your pocket (until i fitted a car alarm and now have to carry the remote around)

Suppose you could shrink it down to the size of a matchbook? Would there be some advantage to being able to carry a dozen of them at one time in your pocket?

Watches used to be big heavy things (not as big as an ipod though). Then with the wonders of technology they managed to make them small enough to wear on your wrist. No one thought, neat i can carry ten watches in my pocket now. But they did think carrying a single watch was now much more practical.