No, this only changes the grid layout for me. I've tried it on 32 bit Vista and 64 bit Windows 7. I hve even tried the 32-bit version of the control panel on Windows 7.
The image below shows the effect on my machine. I have a 3x3 matrix of icons top left of my screen at various settings.
There are three rows on the image - the top is with Small icons selected in the desktop popup menu View. Medium for the centre row, and large for the bottom row.
The left column is with the Icon Size set to 16 in the control panel (which sets the registry setting you mentioned.) That is the lowset value the control panel allows. The second column is set to 32, the default value I found on installation. The third is set to 48, and the final fourth column id set to the maximumof 72.
There are a couple of icons in the shots that do not ever get larger than 48 pixels. That is because they are old applications that do not have the 256 pixel png version of the icon that Vista/Windows 7 needs.
I've tried all sorts of things (rebooting, different DPI settings both with and without XP scaling mode) and there is no way I can get that ShellIconSize entry to change an icon image size.
Incidentally, a quick way to that buried control panel is to run "control.exe desk.cpl,,6". If you change the value in it and hit apply, do your icons immediately change size?
What I see is obviously similar to the results mrquickly reports, but is different to your result. Very strange. I'm sure we are all doing the same thing!