There are a number of transexuals and crossdressers out there who have very small erect penises. But, like all groups, there are also those with large penises and average penises. What seems to happen is that some straight men have begun to fantasize about transexuals who have very feminine qualities (what is often referred to as "passable") and a small erect penis fits the bill. It may be that some men would be turned off by a very effeminate shemale who was more endowed than they, but I think it has more to do with a small penis standing in for a large erect clitoris. Of course, there are also those men who crave well endowed shemales. This is why most websites cater to both. Where you might find ten groups about endowed shemales, there are usually one or two catering to the petite penis.
But these are just my ramblings. What say you?