To me, there seems to be two threads within this same thread. I understand Downsizing to mean getting rid of clutter and perhaps moving to smaller living quarters, as often happens when the kids leave home. I would define Downshifting as more comprehensive, and involves taking a less pressured job, lower salary, becoming more self-reliant. I have the impression it's the latter eanjay is referring to.
I made this kind of move about twenty years ago, when my wife and I self-built a modest house on some rural property we owned. Along with the shift from the city came a change in employment - a mix of home-based business and outside contract work.
There are downsides to downshifting. There's the danger one can find oneself in a "green ghetto", with not enough money to do the things one wants to do (or even meet the basic bills). And you really find out who your real friends are. Everyone comes to visit, once.
The rewards, in my book, outweight the disadvantages. Today, there's a wealth of advice to be had on the web and on forums like this.
Good luck to ya!