Districts are determined by population, not area. So, yes, even if they do "pack themselves in", it should not affect total representation since the composition of districts should change to match. 

Unless they *are* gerrymandered.  Certain regions are too massive to gerrymander - California's Democrat regions are enormous and there's insufficient GOP hinterland to dilute them out, but the same is untrue in Texas. 

We see the same effect in Canada to a lesser extent. Our districts are smaller, but it shows up in smaller cities - Sask used to "pie slice" its cities which almost invariably went Conservative because of the hinterland, but redistricting to geographically smaller, pure urban ridings resulted in the Conservatives losing several ridings to the NDP, and strengthening of the sole Liberal seat.