In Dungeons and Dragons 3.5
Magic Armor and Weapons Don't Resize
The Dungeon Master's Guide (2013) from the section Size and Magic Items on page 213 reads
When an article of magic clothing or jewelry is discovered, most of the time size shouldn’t be an issue. Many magic garments are made to be easily adjustable, or they adjust themselves magically to the wearer. As a rule, size should not keep overweight characters, characters of various genders, or characters of various kinds from using magic items. Players shouldn’t be penalized for choosing a halfling character or deciding that their character is especially tall.
Only say "It doesn’t fit" if there’s a good reason. Cloaks made specifically by the selfish, self-absorbed drow elves might fit only elves. Dwarves might make items usable only by dwarf-sized and dwarf-shaped characters to keep their items from being used against them. Such items should be the exceptions, however, not the rule.
Armor and Weapon Sizes: Armor and weapons that are found at random have a 30% chance of being Small (01–30), a 60% chance of being Medium (31–90), and a 10% chance of being any size of the DM’s choice (91–100).
Therefore magic clothing (which is not the same thing as magic armor) and jewelry resize, and, specifically, magic cloaks should resize. Other items don't resize.
But a case can be made for ambiguity allowing armor to resize despite the final note if the reader conflates magic clothing, magic garments, and armor. (Seriously, as Tridus's answer explains, it took the Rules Compendium to come out and say exactly what was going on in no uncertain terms--and the details there about magic shields were entirely new.) However, such a reading of the core rules permits the system to be gamed using the chart Armor for Unusual Creatures (PH 123). Employing this misreading, a clever magical armor merchant can craft or buy mundane Tiny or smaller armor at reduced cost, make the armor magical, then let the buyer resize the armor to fit. I'm certain war profiteering from grig-sized chainmail--while amusing--wasn't intended.
Armor Sizes in Previous Editions
I thought this confusion might've arisen from the rules in previous editions, but armor only ever resized in Dungeons and Dragons, 3rd Edition (see below). This must be an extremely common house rule (or misconception) in many games because the number of forum questions that show up about this topic via a quick Google search is impressive.
Advanced Dungeons and Dragons
The Dungeon Master's Guide (1979) says that "65% of all armor is man-sized, 20% is elf-sized, 10% is dwarf-sized, and but 5% is gnome or halfling sized" (124).
Advanced Dungeons and Dragons, 2nd Edition
The Encyclopedia Magica says, "When adding magical armor to the game, be aware of sizing problems: 65% of all armor (except elven chain mail) is human size, 20% is elf size, 10% is dwarf size, and only 5% is sized for gnomes and halflings" (67).
Dungeons and Dragons, 3rd Edition
The Dungeon Master's Guide (2000) says, "When an article of magic clothing, jewelry, or armor is discovered, most of the time size shouldn't be an issue" (176). Emphasis mine.