Update: A friend at Pixar says:
The reason for the breast reduction was to get a G-rating from the MPAA. Apparently they threw a fit at the original version. There was some outrage from the team at the change, but the Studio decided they'd rather make the change than not show the short at all.
On an additional geeky note, the short obviously had to be re-rendered, and apparently trying to re-render code almost 20 years old was a technical challenge in and of itself and took a couple of months to sort out all the bugs.
Update 2: Here are the "after" pictures (thanks guyver3!)