The need for amplification is not dictated by room size. An unamplified solo violin can be heard in the Royal Albert Hall if the audience are listening. The problem is background noise.

What's sad is that hardly anybody actually listens to music any more. The iPod generation (and the walkman and boombox generation before it, and pub jukeboxes before that) have got used to music (for some definition of the term) as a background to everything they do, and when there's live music going on they treat it background just the same and talk and shout at each other.