Funny thing... I read that the idea for shrinking the crew goes as far back as season 3 or 4 of TNG, by Rene Echevarria I think. It got vetoed many, many times. I don't remember who finally said do it, or why, but I do remember reading that the science consultants dreaded the day they got the script for a 'shrink the crew' episode.
(I have to say with honesty: it's not a bad episode. It has an interesting difference in strategies by the Alpha and Gamma Jem'Hadar, which we sadly never see again. Probably the best thing the writers did was have Sisko and Kira laughing in the teaser... it let the audience know, "We know this is nuts, but just go with it." In that way, they didn't insult our intelligence by playing it too seriously.)