The reason so many sites use small fonts is mainly because it's fashionable, and looks prettier than larger fonts. Designers do, in fact, need to become more aware of how their design works with various sizes of fonts, and find attractive ways of presenting information
the thing is, most 'web designers' are ignorant of the fact that design for the web and graphic design for print are very different tasks. i tend to browse the web at 120% or so, in firefox. if i see a site where text flows over the top of images, or the layout has serious breakage at 'only' 120%, then my assumption is that the designer is trying to work with the web as if it is a print medium - one where they have control down to a single em, or where they can precisely specify colors (a la Pantone) rather than selecting combinations of the 'web safe colors'. I should mention, in relation to Denise's mention of IE's font size selection options, that I consider that functionality within IE to be terribly broken and limited. Other folks are definitely doing it better, making browsers that are more accessible. --elijah