Stories shouldn’t be small because they need to fit into an iteration, but because the world shouldn’t end just because a story turns out to be wrong. Stories are based on assumptions about business value, and those assumptions might turn out to be right or wrong.
The key questions for story sizing shouldn’t be about the iteration length, but about how much business stakeholders want to invest in learning whether a proposed change will actually give them what they assumed.
Source: Fifty Quick Ideas to Improve your User Stories, Gojko Adzic and David Evans, http://leanpub.com/50quickideas