Exactly, the point where we stop shrinking computers will not be because of a computer hardware limitation but a usability limitation.
We can make a keyboard small enough to attach to a cell phone so why doesn't everyone use cell phone keyboards on desktop computers?
Simply because smaller and cheaper isn't always better.
When they talk about computers shrinking, they're talking about the internals. Smaller internals can mean smaller devices, but it doesn't have to. Usually it means packing more performance in the same size device.