[nickff]

From what I understand, there are a few issues, including:

1) The head has to move further to read the next sector of interest, which is particularly problematic for fragmented data.

2) It is more difficult to manufacture high data density (AKA high-precision) disks in large formats, as some surface defects are cumulative, and get worse as the disk gets larger.

3) Manufacturing defects which occur pseudo-randomly increase proportionally to the surface area of the disk, so the reject rate increases as a square of the radius.

4) Smaller drives can be spun much faster, allowing for higher data rates, as the centripetal accelerations in the disk are proportional to the square of the radius (and I believe the stresses are proportional to the cube of radius).

For these reasons and many others, HDDs have been moving to smaller and smaller form factors.