The classic Enterprise is the size of a frickin' Nimitz-Class Aircraft Carrier with less than half the crew
Half? A tenth
of the crew! Carriers have, like 5,000 crew!
Of course, on naval aircraft, crewmen don't get individual (or even "two per cabin") quarters... you basically get a "rack" and a couple of drawers right under your bed for storage, and that's it. Far from "comfortable."
Part of why this is the case is that on a carrier, the crew has plenty of exposure to fresh air, broad vistas (granted, of the ocean, not so much of land!) and so forth.
On submarines, on the other hand, they're packed in (if anything) even tighter. So submarine cruises are generally very short, and are cycled in and out. It's pretty well established now that continuous living in that sort of situation results in the crew going bonkers.
So... giving each crewmember 10X the space, AND including volumes for recreation and so forth, seems perfectly reasonable to me.
Here's how I see bunking on the ship. First off, I totally ignore Roddenberry's phoney-baloney claim that "everyone on board is an officer." That's nonsense on every possible level, INCLUDING on-screen evidence. The Enterprise clearly had "crewmen" on board, as well as officer ranks (ensign through captain).
The junior-most crewmen would be bunked four to a cabin... two sets of bunkbeds, with a partitioned-off common lounge area and a shared bathroom. This, along with the three-shifts system the 1701 supposely used, allows for a certain degree of privacy while still being very space-efficient. I'd probably put those four-to-a-cabin quarters in the neck, too... the relatively small spaces and large amount of wall structures would fit in well into the structural framework needed for a load-bearing neck structure.
The mid-level crewmen would be bunked two to a cabin... a single bunkbed, with the personnel working different shifts. These cabins would not be partitioned like the junior enlisted ones... no separate "lounge" area... since there would be no issue with noise/light preventing anyone from sleeping.
Senior enlisted crewmen, most warrant officers, and the junior officers (ensigns and lieutenants-junior-grade) would have the same basic cabin, but not a bunkbed, just a single bed.
Mid-level officers... lieutenant and lieutenant commander ranks... would have a larger private cabin with an integral living/office/lounge space which would be partitioned from their sleeping quarters. This would allow them to use that area as an office for use in private meetings with subordinates and so forth, as well as to perform certain other managerial aspects of their leadership responsibilities. Note that this isn't quite the same as what we saw in the series (where there was only one cabin set) but it DOES match what was seen in TMP (where they used half of the cabin set, rearranged, to represent Lt. Ilia's cabin)
Senior officers... Commander and Captain (as well as all of the department-heads, regardless of rank) would have the largest cabins, very similar to what the mid-level officers have but with larger office-spaces (since they might have larger groups present for any meeting). This would be pretty much what we saw in TOS for the "standard cabin" except that the partition wall would be something more like what was seen in TMP/TWOK, not just the mesh half-wall seen in TOS).
The only places where this doesn't match with what was seen on-screen would be with Ensign Garrovik and with Janice Rand, in TOS. Well, I have no problem mentally "retconning" Garrovick's cabin to be smaller... it's not like that has any real effect on the show. And as for Rand, well... I suppose as the Captain's Yeoman (who would be required to handle most of the captain's day-to-day business operations) so even though she's either an ensign (unlikely) or more likely a mid-level enlisted crewman, she'd rate the "special accomodation" due to having to use the cabin as an office as well (she is, after all, the "captain's secretary.")
Given all that... the 947' Enterprise easily holds a crew of 430 plus about a dozen full-sized "guest cabins," plus all the working spaces and cargo holds and so forth.
The only reason for upsizing the ship to 1080' comes down to trying to fit (as closely as possible) the existing sets into the existing model, with the hangar being the real "key factor." The bridge ends up needing some "size tweaking" (largely making the lift-entryway a bit deeper) but otherwise everything works.