Are there tradeoffs associated with usinng SMD resistors or capacitors larger than a 0805 footprint? As the footprint becomes larger what considerations should be made?
Larger parts can generally safely dissipate more power.
Larger capacitors can achieve higher capacitance values and/or working voltages.
Larger resistors will have higher breakdown voltage.
Larger parts take up more space.
Larger parts will have higher parasitic inductance. Especially for capacitors this restricts their useful frequency band. The parameter of interest here is ESL, or equivalent series inductance. As circuit speeds increase and the lumped model begins to fail, these parasitics can become significant and degrade performance.
Larger parts (particularly ceramic capacitors) are more likely to be damaged if the board flexes, and due to thermal changes because of the mismatch of coefficients of thermal expansion. Ceramics larger than 1812 are particularly prone to this issue, which can cause problems in high reliability applications.
Dave Jones over at EEVBlog does a great job at explaining why to use different sizes of capacitors when used as bypass caps. Check it out, it will be worth your while to watch this video: