The main reason you may need to shrink an image is when you download a game and it has already had the garbage removed (with another app might I add). Since Dolphin struggles reading the gcm when it's shrunk using another app, shrinking it with Dolphins own organises the data in a way Dolphin can understand. As _Chrono_ pointed out however some games break when shrunk, or even increase in size, above 1.35gb.