By merging multi source files into a big one BLITZ not only reduces compilation time but also improves compiler optimization because when compiler can see more source code in one pass it is able to perform better optimization. By doing this code size can increase (because of aggressive inlining) or decrease. It depends on code.
The easiest way to understand why your app is big is to generate a map file and analyze it with amap.
If you post your map-file here I'll tell you what is wrong with your app.