Subtle UI trick: With the pointer over a shrunken iTunes' window, scrolling your mouse's scroll wheel changes the volume up and down.
[robg adds: This works on full-size iTunes' windows, too -- just make sure your mouse pointer is over the volume slider itself; with the shrunken window, the mouse just needs to be somewhere on the iTunes window itself.]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20040222190504926