P.S.: Some evidence in opposition to this "shrinking" theory might be the history of life on Earth: In general, both life and intelligence have been breaking new ground via larger and more-complicated systems.

This is especially true if you relax "intelligence" into something more like "computation." For example, your immune system is in a long-running cryptographic (or at least combinatoric) struggle against most other nanobots on the planet, not just in terms of inherited traits, but also during your own lifetime.

https://en.wikipedia.org/wiki/Somatic_hypermutation