What I ultimately found was having that many small chips in the game slowed the game down when people bet stacks of small stuff.
Yes, this happens a lot. I had my usual two-bit cash game (25 cent big blind), and had about 140 or 160 quarters on the table, generally playing seven handed (people come and go.)
And it felt like it was too many, because they accumulated at one end, and that player then started making $5 bets and raises with stacks of quarters, and it was much more annoying to deal with than five singles or a redbird. (He's a relative notice at the game.) Meanwhile, other people would still end up short quarters... whoever is losing quarters will still end up short quarters, no matter HOW many you buy them in with, unless you buy them in with nothing but quarters... and even then, some people will always need to rebuy.
Even so, making change out of the pot drastically reduces the number of times we need to actually make change... When someone puts up a dollar and says, "call," it just sits there until the betting is done. If there are just two other limpers, you've got three quarters in the pot... dollar comes in, the three quarters go out as change, done. Or if someone raises to a dollar, and they have quarters, they do it with four quarters, because they see someone is owed change. Most of us do it reflexively now... people manage their overstock of quarters by betting them into pots regularly, and people shy on quarters become comfortable just saying "call" with a larger chip.