The moral of the story is the fact that no matter how amazing the car maker’s logo is, if the car looks like rubbish or doesn’t work well or won’t live up to user expectations, no one will buy it.
Plainly put, the logo is not the important feature of the website. Rather, it is the content and the brand’s ideals that should be emphasized. Consequently, the logo should not dominate the page, but rather work subtly to help to lend gravity, interest, and context to the website.
So, no, don’t make the logo bigger. Instead, make the branding effort bigger and let the logo do its simple job on the web page (and elsewhere). Save your giggles and lets agree that small is just fine (unless we’re talking about a bar of chocolate).