Keep in mind that white matter is the wiring that is connecting the gray matter. The glia are the cells that support the neurons. And so on. It doesn't really make most sense to just assume that you can enlarge gray matter, and shrink any of that, without making it work even worse than with more uniform shrinkage.
See, that's precisely why hypotheses are not equally plausible. The hypotheses are:
a: recent shrinkage was accompanied with some loss of function of the shrinking organ
and
b: recent shrinkage would have been accompanied with some loss of function of the shrinking organ, BUT there was a hypothetical low hanging fruit that was picked at same time [proceed with making extra hypothetical assumptions about what the low hanging fruit might be].
The latter hypothesis is strictly more complex than former. Probably complex enough that we wouldn't even have been talking about the latter hypothesis had we not arrived at it via backward reasoning, starting from the notion that we didn't get dumber.
I don't think you have looked at the brains, and at evolution, and have said - ohh, it makes the most sense that shrinkage of the [whatever you think is shrinking] and growth of the gray matter, is the way how the intelligence and efficiency would have been increased. I think you picked a notion that we didn't get dumber, and then thought of the ways how you think things could have went so that we didn't get dumber.
I just reason forwards. I have the shrinkage, I have the relation between size and function, I have the evolution trying to shrink the brain without loss of function for millions years before that timespan, yet the size increased. I reason forwards to loss of function in the recent shrinkage, likely loss of intelligence (which doesn't bother me as I don't believe evolution uniformly leads to things we call better).
The human brain volume has been shrinking over the past 20 000 years or so, after millions years of increase in volume. Not just the brain size, but the brain size relatively to body size as well. We are lacking a tennis-ball sized piece of our earlier brain (and it might even be God-shaped).
Brain is expensive in many ways: energy consumption, birth complications and locomotion impairment for females, lower survival of head impacts i'd guess. The damn thing along with supporting structures is heavy and awkwardly located, etc.
And the big brain can only be advantageous if it improves reproduction substantially, with larger brained individuals being sufficiently more successful at surviving and reproducing than smaller brained individuals, as to negate the above-mentioned cost.
That must have been the case through the evolution up to a couple tens thousands years ago, to produce the big brains that we have. It is clear to see that in past 20 000 years, the environment in which humans live has undergone very significant change due to emergence of societies; the new environment may not be pushing us as hard [in the direction of intelligence], at least on the individual level. [and may have been pushing us too hard for smaller brains, thanks Nornagest for making that point]
We were evolving ability to think, until it got just about to the point of being barely able - with great difficulty and many falls - to think useful thoughts. If we were species that were evolving flight, we'd be the species that could just barely fly, and recently flew over a river, entering new land. In the new land, everything is different. And our wings were shrinking at very rapid rate.
The important question is - Did we lose any functionality since then? Are we dumber? Are we less sane in some way? (The palaeolithic humans did not seem to do any really insane religious stuff)
The notion that our brains just got more efficient and 'therefore' could shrink in size appears very shaky to me. This 'therefore' comes from fallacy of anthropomorphizing the evolution. Evolution doesn't work to a goal of optimizing some sub-unit in the organism while preserving specifications, in the way that a team on an engineering project would.
The optimization could as well instead make brain even larger, if said improvement made larger brain pay off more. One would have to show that some improvement in brain efficiency has actually decreased advantage of big brains over small brains, to explain the smaller brains with them being more optimized.
The evolution optimizes the whole organism, not the brain, and there's very many of other factors that have changed at that specific time that may as well have decreased selection pressure towards intelligence or increased the costs.
In my opinion the sensible default hypothesis should be that we had a decrease in some functionality, and likely are still declining.
My best guess is that it is the capacity to invent solutions on spot and think by ourselves, that we are losing. Before emergence of societies, the technological progress was severely limited by information loss. Any smart individual could massively improve fitness of the relevant genes by (re)inventing some basic, but extremely effective techniques, which he'd teach mostly to genetically related individuals. The technique would easy become lost, creating again an opportunity for intelligence to succeed - reinventing it.
Even very simple invention requires massive search in the vast space of possibilities. Precisely the kind of task that one would expect to benefit from larger raw computational power.
edit:
Some clarification with regards to the need for innovation. In the long run, it is not enough to just do what you're taught. Teaching is a lossy process. You need to improve upon what was taught to you a little to make the tool as good as your ancestor made - you need minor innovation to merely preserve the tools - a little more innovation and you'll improve over time, a little less and you'll lose it over time. The little children have to figure out everything from a few clues; they don't download some braindump of the wisest elder to be able to speak, they essentially figure out an alien language - a very difficult task.