You can't just increase the size of a plot in the overworld. They have a fixed size and the entire map would need to be reworked to allow for every house to have the size of a Large.
But then you'd be stuck with the problem that they'd need to put invisible walls in the middle of your giant garden until you upgraded to max size, because otherwise you get to use more space than you payed for.
Also, we'd have only a handful of houses per area because they'd take up so much room. This sounds like a really bad idea
Unless you are talking about a TARDIS-effect, where it's bigger inside than it looks from outside.
But that would suck for the people who want to upgrade just to have a bigger garden.
Really, there is no scenario in which I see this play out well. Except for housing in which every house+garden is it's own instance, of course

But not with the current neighbourhood system.