Heh, I'm one of those Shepperd people and can tell you straight out that with the new density of condos going up along young and finch and the shepperd area it's going to get a whole lot worst before it gets better. I always get out the door 5 minutes earlier than I need to so I can ride the train north to Finch station to get a seat and not be squished.
Over the past 2 years I've been riding the subway downtown this way I can verify that it is getting worst. 2 years ago you could feasibly get a seat in the south 3 cars with regularity. Since about spring 2007, subway cars are getting filled up at just the Finch station alone. By the time it hits Shepperd-Young (especially if a Shepperd train has just stopped) the train is packed like sardines.
Another problem is of course "emergency stops" which backlog the system terribly. In any case once all the new condos along Young-Finch and Shpperd east of Young get built in 2009-2011 the subway system as is will buckle very badly, new higher capacity trains or not...
Despite naysayers, the Shepperd subway station was not a mistake, except ending it to early. I remember having to ride the bus when going to York U. Rush hour in the mournings made it awfully bad. What takes me 10 minutes by subway (from don mills to Shepperd-Young) used to take me 45min-1hour+. When all those new condos go up it'll be even worst.
The reality is, the city traffic is going to prevent Toronrto from getting bigger and better in 3-4 years time. I'm not just talking about the TTC but the whole traffic grid in general. Reality is road lanes are going to have to have to hit 3 lanes with 1 lane dedicated only to the TTC during rush hour. Problem with that need is that a lot of places are narrow. Mayhaps the city needs to reclaim some land from property owners?
The city really needs to deal with this sprawling very soon. The cheapest way would obviously be to make 1 lane for buses only during rush hours (aka more diamond lanes and express buses) but this is only a temporary solution at best. Your still going to have major crowding at major cross section routes.
If subways are too expensive and big, maybe it's time to reexamine underground LRT /streetcar routes? They would be much smaller. A few of them shuttling people to the bloor line might help.
Or if we were going to be really creative (and future thinking) then maybe the city should think about decentralization of the core. In other words, give incentives to companies that put up offices in less dense areas and builders to build in those areas. If you make traffic flow in all directions at rush hour instead of just one you can effectively grow the city so long as you have undeveloped land. You'd also revitalize areas and stabalize land values.
The side benefits are increased tax base, not needing to restructure current roadways, the private sector paying most of the upfront costs, working poor arn't punished and routes that the TTC used to lose a lot on would actually be feasible.