Do grips shrink with age?

[Olle]

You can recondition wood, but it's an iffy process. Wood will expand and contract with humidity, and the only way to prevent loose grips would be to seal them permanently while they're at a moisture content that makes them fit perfectly. That's easier said than done, and if you don't get them perfectly sealed they will still dry out afterwhile. When that happens, you'll have a jolly good time conditioning them again, as "re-moisturizing" sealed wood will be an extremely slow process.

Also: Keep in mind that wood will compress, so some (maybe most) of the slop you find in old grips is caused by tightening/retightening the screws, shooting, handling etc. Shimming them is by far the best option, and some methods have already been described in previous posts. One of my favorites is to use small pieces of rubber band, it will compress and give you a very snug fit. It may not be practical with Luger grips, but this is what I normally use on revolver grips. If it's just a matter of a few thousands, I use small strips of paper. You can even super glue these to the gun, super glue is easy to remove with acetone and it won't hurt the finish.