Changing the sizes of creatures a druid can assume using wild shape based on the druid's size would be even more unbalanced
Usually, unbalanced means too powerful. Not in this case. Such a house rule doesn't vastly increase the PCs' power because PCs typically already pay a premium for being smaller than Small or larger than Medium; instead, it's unbalanced for the PCs' opposition, who, if at extreme edges of the size category chart, will find themselves increasingly limited in the forms they can assume.
Thus, while keeping things as they are seems dumb, doing so puts all druids at the same balance point. The current rules have druids no matter their actual sizes assume the same size forms; a house rule changing this might look like this:
At 5th level, a druid gains the ability to turn herself into any animal of his size category or one size category less than his own.
A druid can use this ability more times per day at 6th, 7th, 10th, 14th, and 18th level, as noted on Table: The Druid. In addition, she gains the ability to take the shape of an animal one size category more than her own at 8th level, two size categories less than her own at 11th level, and to take the shape of an animal two size categories more than her own at 15th level.
The new form’s Hit Dice can’t exceed the character’s druid level.
At 12th level, a druid becomes able to use wild shape to change into a plant creature with the same size restrictions as for animal forms.
At 16th level, a druid becomes able to use wild shape once per day to change into an elemental of one less size category than her own, equal to her own size category, or one more size category than her own.
At 18th level, a druid becomes able to assume elemental form twice per day, and at 20th level she can do so three times per day. At 20th level, a druid may use this wild shape ability to change into an elemental two size categories more than her own.
The consequences of this are severe. Consider a grig druid. Here's his shapes by level as per this house rule:
Then consider an ogre druid1 that has the following options:
Now, while Monster Finder isn't 100% accurate (for example, it lists as an animal the ankheg), it's close enough to get a feel for what's happening. Excluding swarms (unavailable to most druids) and outlying elementals (so far as I am aware, most DMs exclude elemental forms besides basic ones), this doesn't leave the grig druid with a whole lot of options, yet the ogre druid has many, many forms it can assume from the moment it acquires wild shape.
Without this house rule, the two druids have the same amount of versatility at the same price; with this house rule, the grig druid's class feature is demonstrably less useful than the ogre druid's.
Further, low-level druids of extreme sizes will be in even worse positions than these two druids. They'll sometimes have either very few or even no forms they can assume using wild shape. For example, there aren't any Huge or Gargantuan 5-HD-or-less creatures whose forms a Gargantuan druid can assume, and there are only two Diminutive and no Fine creatures whose forms a Diminutive druid 5 can assume.
The counterargument: just don't be a big or little druid
In a campaign using this house rule the grig druid, for example, has simply made a bad choice in electing to take levels in the druid class, just like it would be a bad choice for it to take levels in monk. However, druid is a bad choice for the grig and similar creatures only because the house rule punishes the creature; usually, druid is an excellent choice for such a creature, and one reason it is an excellent choice is because of wild shape's functionality. The house rule changes the choices NPCs make for taking class levels, and the DM must recognize this house rule as now having an impact on his campaign's demographics, which can make for a lot of work.
Finally, if running a published adventure, the DM will have to adjust the tactics of any nonstandard-sized druid, making more work for himself when using a tool intended to make his life easier.
Such a house rule creates a whole new dynamic for NPC druids (which are already complex) for little or no benefit (and sometimes to their detriment) and affects the PCs only rarely (but see below).
Size changing isn't that difficult
Size isn't a constant. Even if a PC druid isn't a Tiny jermaline (MM2 131) or muckdweller (SK 71) (both LA +0) or a Large incarnate maug or half-minotaur (Dragon #313 94-5) (both LA +1), a Small humanoid druid becomes Tiny when the subject of the spell reduce person and a Medium humanoid druid becomes Large when the subject of the spell enlarge person. Either effect is available for as a little as 50 gp through a potion (the 100 gp price a D&D 3E artifact) or permanently from a level 20 caster for under 4,000 gp. That is, even a DM who doesn't plan for this house rule to affect the PCs may see it affect the PCs anyway.
Hence a DM who implements this house rule may find PCs stockpiling such potions of size change solely to improve the variety of forms they can assume using wild shape; published monsters won't have done the same, but they would have had they known of the house rule. A DM wanting to maintain his setting's verisimilitude may have to customize such published monsters' gear, further increasing his burden.
A compromise: the feat Proportionate Wild Shape
The Dungeons and Dragons, Third Edition sourcebook Masters of the Wild presents the feat Proportionate Wild Shape, the benefit of which is as follows:
You use your wild shape ability to take the form of an animal whose normal size category matches your own. For example, a cloud giant druid (size Huge) with this feat could use wild shape to become a Huge shark or a giant squid. (24-5)
This is an interesting workaround for the oversized or undersized druid at the price of a feat. (Because this is Third Edition material, the DM can adjust the feat to bring it in line with 3.5 standards.)
1 Hey, ogres don't have a Wisdom penalty. Sure, wild empathy will be a problem, but whatever.