The study of economics throws up some fantastic names for concepts or economic models, some of which have become part of the standard lexicon, such as the Law of Diminishing Returns, or the concept of opportunity cost, which I've written about before.
Though it sounds like it might be something out of Doctor Who, The Paradox of Thrift is a Keynesian concept which basically says that, contrary to what might seem obvious, saving money (as in people putting money into savings accounts) might be bad for the economy (in essence, if people saved more and spent or invested less, it would reduce the amount of money in circulation and cause an economic system to deflate). There's a similar paradox to managing mailbox sizes in Exchange - from an IT perspective it seems like a good thing to reduce the total volume of mail on the server, since it costs less to manage all the disks and there's less to backup and restore.
Ask the end users, however, and it's probably a different story. I've lost count of how many times I've heard people grumble that they can't send email because their mailbox has filled up (especially if they've been away from the office). End users might argue they just don't have time to keep their mailbox size low through carefully ditching mail that they don't need to keep, and filing the stuff that they do.
I guess it's like another principle in economics - the idea that we have unlimited wants, but a limited set of resources with which to fulfil those wants & needs. The whole point of economics is to make best use of these limited resources to best satisfy the unlimited wants. Many people (with a few exceptions) would agree that they never have enough money - there'll always be other, more expensive ways to get rid of it.
It's important to have a sensible mailbox quota or the paradox of being too stingy may come back and bite you. Some organisations will take mail off their Exchange servers and drop it into a central archive, an approach which solves the problem somewhat but introduces an overhead of managing that archive (not to mention the cost of procurement). I'd argue that it's better to use Managed Folders facilities in Exchange to manage the data.
The true paradox of mailbox quota thrift kicks in if the users have to archive everything to PST files, then you've just got the problem of how to make sure that's backed up... especially since it's not supported to have them stored on a network drive (though that doesn't stop people from doing it... Personal folder files are unsupported over a LAN or over a WAN link). Even worse (from a backup perspective) is that Outlook opens all the PST files configured in its profile, for read/write. So what this means is that every one of the PST files in your Outlook profile gets its date/time stamp updated every time you run Outlook.
This of course means that if you're storing your PSTs on a network share (tsk, tsk), and that file share is being backed up every night (as many are), then your PSTs will be backed up every night, regardless of whether the job is incremental/differential or full. I've seen large customers (eg a 100,000+ user bank) who estimate that over 50% of the total data they back up, every day, is PST files. Since PSTs are used as archives by most people, by definition the contents don't change much, but that's irrelevant - the date/time stamp is still updated every times they're opened.
So as well as losing any benefit of single-instance storage by leaving the data in Exchange (or getting the users to delete it properly), you're consuming possibly massive amounts of disk space on file servers, and having to deal with huge amounts of data to be backed up every night, even if it doesn't change.
If you had an Exchange server with 1,000 users, and set the mailbox quota at 200Mb, you might end up with 75% quota usage and with 10% single instance ratio, you'd have about 135Gb of data on that server, which would be backed up in full every week, with incremental or differential backups every night in between (which will be a good bit smaller since not all that much data will change day to day).
If each of those users had 1Gb of PST files (not at all extraordinary - I currently have nearly 15Gb of PSTs loaded into Outlook! - even with a 2Gb quota on the mailbox, which is only 30% full), then you could be adding 1Tb of data to the file servers, hurting the LAN performance by having those PSTs locked open over the network, and being backed up every day... Give those users a 2Gb mailbox quota, and stop them from using PSTs altogether, and they'd be putting 1.2Tb worth of data onto Exchange, which might be more expensive to keep online than 1Tb+ of dumb filestore, but it's being backed up more appropriately and can be controlled much better.