I think about this often. I grew up in a 1200 sqft house (4 of us) and it was more than ample. My mom grew up in a family of 10 in an even smaller house.

Why families of 3-4 need a 3000-4000 square foot house these days is mind boggling - all I can think of is bragging rights or real estate greed. Nobody actually utilizes all the space all the time - "guest rooms" sit empty. The reality in my family and extended family is the guest rooms are only used a few weeks a year at the most. People sit in their favourite room either gaming or watching TV or working all day. Or they're out (e.g. at their workplace, not home) for 8-12 hours a day.

Today, I live in a 600 sqft condo. Is it enough - yes. Do I wish it was bigger? May be just a bit, but a better or more functional layout could do the trick. I already find I'm accumulating too many things and constantly cleaning.