My hypothesis on the shrinking brain:
It may be that rather than more intelligence as a consequence of a larger brain, the reverse is true--that as an evolutionary response to greater intelligence and our reliance on it, we evolved a larger brain.
Since brain size has been linked to longevity, in smaller, preliterate cultures, longer-lived elders would conserve and contribute to the cultural pool of knowledge. Note that all that is necessary is longevity in certain lucky individuals as opposed to average lifetime of the entire community (maximum useful lifespan vs. average life expectancy). In other words, having a few lucid elders as repositories would be crucial to maintain the benefits of experience, customs, expertise and technological innovation.
Another thing to remember is that the brain cannot repair itself like the rest of the body. We may be able to continuously regenerate skin cells, but we can't grow a new brain since we must maintain existing neuronal relationships in order to preserve memory and who we are. Brain growth must begin early, then stabilize as maturity is reached. At that point we have a lifetime reserve of brain cells that, in case of injury or disease, neuronal redundancy serves to mitigate the damage.
If brain size is decreasing while intelligence is stable, perhaps it is our softer lifestyle, but it could also be that older age individuals as repositories are no longer necessary with literate populations and mass culture.
To sum up:
1 Larger brain is an evolutionary product of greater intelligence and reliance on it, not the commonly believed reverse.
2 A brain must maintain integrity with redundancy as opposed to regeneration
3 A modern decrease in size is due to less need of individual older people as repositories of culture as they were in small preliterate communities
4 Larger brains have been linked to greater longevity in mammals in general and specifically in primates. (see refs below)
Brain weight and life-span in primate species.
J Allman, T McLaughlin, and A Hakeem
Hofman MA. Energy metabolism, brain size and longevity in mammals. Q Rev Biol. 1983 Dec;58(4):495–512. [PubMed]