This is where I think you have it right. It's really not small vs. big. It's the team with the superior talent that trumps all. The Grizz got punked by a smaller team. If bigness was the be all, end all, then that wouldn't happen. Same with the Pacers. Why? Because LBJ gives Miami superior talent. (When you say LBJ is a "freak" it really means he's the most talented player on the planet). So maybe the focus shouldn't be on big vs. small, but instead should be on accumulating the team with superior talent. How many teams don't win that have the superior talent? I'd say a lot few than those that are bigger than the opposing team. Therefore, the focus should be on talent, not size.
Of course the focus is on talent, and every team in the playoffs is talented. And somewhat different. I'll tell you this! Coaching is far more important in the playoffs than at any other time of the year. Its no accident that Popivich has all those rings. The Heat are very talented, but not deep. Thats their weakness, and the more you can exploit that, the better your chances of winning.
By the way, I don't entirely agree that the Grizz got punked by a smaller team. Duncan and Splitter certainly have the size to match up, or at least hold their own. I guess you could consider Parker a wee bit undersized, but other than that, I don't really look at the Spurs as being a small team. They were just a better, more balanced team.