Actually, quality and size have nothing to do with each other.
As pianos get larger (longer grands, taller uprights) the have larger soundboards and longer strings. If all other things are equal, a larger modern piano will be louder than its smaller counterpart and with slightly deeper bass. Both of these are helpful in larger rooms, but they can be overpowering in smaller rooms.
Initially, all pianos were very, very large. The technology did not exist to make smaller pianos and since they were only purchased by royalty and the wealthy, there was no market for them anyway. As the piano began to grow in popularity, manufacturers began to experiment with smaller scale designs that would better fit in middle-class homes. Most of these pianos performed poorly, with tubby bass and thin tone. Then, in 1936, everything changed.
Steinway & Sons introduced the Model ‘S,’ a 5’1″ grand that rivaled the sound quality of big pianos, just with less volume. The Model ‘S’ had taken so long to develop that one of its designers referred to it as his “baby.” Since then, all small grand pianos became referred to as “baby grands.”
Today, a piano professional can help you find a well-built, baby grand piano that will perform beautifully in an appropriate sized room.
“Is bigger ever better?”
Many of today’s better known brands build their smaller pianos to significantly lower standards than their larger grands. This has nothing to do with size. It’s simply a marketing decision that allows these companies to offer pianos closer in price to the best value brands. In all of these cases, the consumer is “paying for the name.” You can always find a better built piano for the same or less money by a more progressive piano company.
“How can I tell the difference?”
Compare all of the pianos made by the same company. If there are two or more pianos the same size (within an inch), the lower price model will be the “leader.” Everything from this size down will be a budget built piano.