OMG. This is going to be interesting.... Why the hell cap it at 25? That is a weird number to put it too. Well at least it means for me as as a new 60 leading towards raiding that I don't have to push 40 man instances, since according to this it will be a thing of the past.

Edit: I guess it might allow those guilds struggling to get 40 revert to 25 man raiding. While the bigger succesful guilds might do 2 raids of 25 men? Or maybe in EJ's case 3? Very strange.

I'm sure that this will accompanied by an uproar that will be almost completely unjustifiable when the time actually comes.

In all honestly, after running a guild that runs 40-man raids for over a year, I can see this leading to a cleaner play experience. The logistics of raid guilds, like most things, grow very nonlinearly with group size. So no matter what, wouldn't that be a welcome change for anyone? A higher percentage or your time spent actually playing with 24 other people, just because less time is spent making the guild exist. And, to be honest, I'm sure many, many raid leaders, when confronted with the option of simply dropping 15 people of their choice, would not have trouble finding some good in the situation.

On the flip side of things, a guild could choose to grow a bit. The EJ model will be a lot more viable now. Recruiting 10 people is not hard, and there will be no shortage of players at that point in time. A successful 40-man guild now could make the jump to 2 raid groups without a massive increase in management power.

Given the flux of players both into and out of the game during the beginning of TBC, it's unlikely that staying at precisely the same size will be an especially easy option--it will probably be just as easy to grow or shrink a bit. As long as a guild plans in advance, the "transition" doesn't have to be a huge strain.

So the real question is, will encounters be more or less fun with 25 than with 40? Would many current enounters become conceptually impossible? Not really. Look at Naxx:
Anub'Rekhan and Razuvious--you could practically do them with 25 right now.
Noth--might require some finesse to make it work. The chaotic zerg-type spawns will be the toughest thing to maintain the feel of on a smaller scale.
Patchwerk--change some numbers.
Thaddius--3/8 less likely to screw up each time.
Loatheb--cheaper
Four Horsemen--hmm. Three Horsemen? Two and a Half?
C'Thun -- just fine.
Emps--remove a minor complication (maybe make mutated bugs something that get soloed), and you're fine.

As I can see it, the only real problem is things that qualitatively require a certain number of tanks. But that problem exists now, not in any really different form. So the design space they're losing is quite small. I expect that it will also grow in some nontrivial manner, which we can look forward to.

I'll just reiterate since this thread appears to be the winner....

The point is that in the past, when games have made groups smaller, the skill does not increase as some might expect - unless you start from a larger whole. In the end that will be shaved off by attrition.

In FPS'ers i've experienced this in, and in MMO's, as you go smaller and smaller the game becomes less and less dynamic.

Individual player skill isn't important in a 40 man? Come on... Thaddius? 4 horsemen? You can absolutely push the envelope with larger raids.

Does anyone actually find ZG or AQ20 anything less than a complete snooze fest? I abhor those zones, and most of it is from the entire lack of anything novel or interesting there... 20 players just doesn't seem fun or fulfilling.

The change is clearly one catered toward casual players, and perhaps an attempt to fix the lag issue.

25 man raids are a great idea, but not at the cost of 40 man raids. You should have both.