Agree with your point about both the size of the country and the funding they are receiving. That said, when I visited Estonia in the early 2000s, prior to being in the EU, their broadband infrastructure seemed better than that of Finland and Germany (two countries I spent time in). That may have well been due to it's overall size.
What is interesting to me about Estonia now is the lack of overall diversity in the tech sector there. The biggest tech employers seem to be the government, the banks, and Skype.
Maybe Skype buyout V2 will inject more in the way of a startup culture there.