If undo_retention param is increased, the filesize will likely increase. It will not shrink on it's own if you reduce the parameter. Switch to a new undo tablespace and remove the old one (after the transactions are done .. which may take some finescing)

If the number of changed blocks in transactions increase, the filesize will increase. It's all about how much data to hold to satisfy your undo_retention timespan.

I didn't know about the number of connections effecting this, but It seems plausable in my mind.

Ken