This issue isn't that rental companies are using smaller cars, it that what we use to think of as smaller cars have gotten bigger. What some of you are overlooking is that all these models i.e. Corolla, Focus, Cobalt, which all used to be considered "compact" years ago, have grown substantially in size, especially when it comes to interior room.

Back in 1989, when you reserved a compact ,you expected to receive something like...a Corolla. Mid size would have gotten you something like a Tempo or Corsica, and full size would have implied a Taurus or a Lumina. Compare a 2010 Corolla or Focus to the "mid size" cars of yore, and I think you'll find they stack up pretty evenly in terms of size, probably better. I think a lot of us got used to "mid size" implying something like the old Malibu (Classic), however, current model Corolla really is about the same size, and might even have a bit more interior room.