I am sure there are smaller, but the ProAc 1SC is a world class speaker, within its frequency limitations, and quite small.
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I bought a friend a set of the Axiom Millenium 3Ti bookshelf speakers, I broke them in and gave them a good listen. I thought they were great as the highs were especially nice, very extended without a bit of harshness. They easily bettered a set of Mission 731i speakers I have. As long as you don't mind giving up deep bass these speakers are awesome, plus they retail for only 275.00.
There's only one small speaker worth owning, but it ain't cheap - the Dynaudio Contour 1.3SE at $3500 pr. retail. They are, without doubt, the best available sound at twice the price, and they have useful bottom end extension. In a small room, you won't need a subwoofer. In a large room with a quality sub, you'll wonder why people bother to buy large speakers. If money's an issue, then go for the 1.3 MkIIs, which beat out any small monitor for less than $3500. If you haven't heard the 1.3 in either version, you haven't heard good sound.
I'm really enjoying my Silverline SP12's. A tad over 6" wide by 8" deep and about 10" high. The imaging is excellent and the sound can be absolutely striking on some recordings. There is a rear port however which may be a consideration if you really want to put them on a bookshelf. They are very well finished enhancing the WAF. The sound is consistently well balanced from very quiet background music to loud listening in a small room. Roger Waters' dog is behind my right ear with these babies.
There's another $3500 Danish wonder bookshelf that has impressed me more than the Sonus Faber Electa Amators, ProAc 1SC's, Dynaudio 1.3SE's or B&W N805's ever did in my system...they're the System Audio SA2K speakers. See them at http://www.system-audio.com/showpage.asp?siteid=2&id=312
Power handling: 200 Watt
Impedance: 4 Ohm (easy load)
Frequency response (+/- 1.5 dB): 40-30.000 Hz
Sensitivity (1W, 1m): 87 dB
Crossover frequency: 3000 Hz (24 dB/oct. Linkwitz/Riley)
Dimensions (WxHxD) cm: 19.5x34.5x30 (in: 7.7x13.7x12)
Woofer: System Audio W2K (custom Scan Speak)
Tweeter: System Audio TK (custom Scan Speak)
Finish: Maple (real wood). Other finishes available on order
I've had them since the January CES where they sounded incredible with the new BAT integrated. I brought them home and am using a Sonic Frontiers Power 2 and Kora Eclipse preamp with them and don't need a subwoofer to feel the Chinese drums on the final track of the Burmester III CD nor a piano in my living room to bring Melissa Walker to life in my living room on the first track.
I've mentioned the Sequerra Pyramid MET-7 monitors before on this forum, and I think they are among the finest small speakers ever made. Richard Sequerra is, of course, one of the great designers in high-end audio, probably best known for his Sequerra tuner. The current version of the speaker is the 7.7, and it's an outstanding performer.
I second System audio & LS3/5A. The size of S-Audio is inversely proportional to the size of the amp that will drive them to perfection. The cost is comparable! They're supposed to be mega-speakers for a small room -- the idea being that a small room can acommodate the appropriate amplifier...
Audio Physic Steps are also nice, & the Triangle & JMR are pleasant performers for a VERY pleasant price, IMO.