TAE has a great post on the "Too Big To Fail Fallacy." Throughout it he points out the difficulty of line drawing of what constitutes "too big." The Madoff investors? Workers on Main Street? Do read the whole thing.at
My thinking on the subject is that it is not a linear relationship, where small groups add up into big collectives, but a circular one. "We" want to protect the local Mom-n-Pop's because of how cute and localish they are, and thus "we" don't want to see them fail. They're just so tiny and cute, how can you just let them fail?
The further you move in either extreme of size, the more likely you are to have populist and elitist support for circumventing their evolution.