Xfire finally listened to everybody and made the thing smaller:
There's 2 other sizes as well. All are sig compatible.
Now we need to decide, do we want the sigs back? Personally, I don't miss them THAT much. It kinda makes me look at people's avatars instead of their sigs, and the av is close to the name, so I'm kinda learning people's names. Either way, sigs or not, I'm happy.