I think the worst case of shrinking product was some years back with Triaminic cough syrup. The company came up with a sneaky way to double the price, and not make it so obvious:
This was a product intended for children, and we all know how kids don't like the taste of medicine. Their "solution" was to make it taste better. They did this by cutting the amount of medicine in the bottle in half, diluting it to fill the bottle. So you got the same size bottle, at the same price, with half the medicine.
This of course meant that kids would have to take twice as much to get the same effect. This was in the new dosing directions on the back of the bottle, but long time users of the product, and physicians, might not notice that and give kids the old dose measurement instead.
The FDA stepped in and slapped the company, requiring them to place a HUGE label on the front of every package of the product, alerting to the new dosing information.
Instead of a great ad campaign all about their 'improved product' the company ended up with a media & public relations nightmare.