It is significantly more a matter of convenience than baby size. The entire OB industry is based around convenience, painlessness and reducing the amount of time medical staff need to actually work on you. They want to clear the bed for the next patient as quickly as possible. Another significant part of the problem is medical care professionals (at least in the U.S.) treat childbirth like a pathology rather than a life event. Both the doctors and the patients treat this like something that should be scheduled, painless, and regimented when the process is unpredictable and defies easy scheduling.
My wife had both of our children at home under the care of a midwife. The birth was painful and messy, but our children are healthy. Contrary to what you see on medical shows, movies and TV, most of the events of birth take a significant amount of time... it's not 5 minutes between "my water broke" and "baby is born" unless you have to fit a birth inside a 22-minute show.
Cost-wise, the home birth cost much more out of pocket, but was actually significantly cheaper overall - somewhere between 15 and 30% of the cost of a hospital birth. Of course, these costs are hidden when you have insurance, but be assured that somebody pays that extra 70-85%.