FROM THE WEB:
If you hover the mouse pointer on a blank bit of desktop, hold down the Ctrl key and scroll down using the mouse wheel, you can scale down the desktop icons until they're almost non-existent.
'Ctrl+scroll wheel' works to zoom in most apps (browser, MS Office, Explorer etc.).
Right click the desktop > View > Small Icons (Classic on Vista). That is the smallest icon size you can have.
If these sizes are still not small (or big) enough for you, then you can hold down Ctrl whilst scrolling the Scroll Wheel to change it to the exact size you want.
Edited by buddy215, 15 June 2011 - 12:44 PM.