I found that the size of msi file is 69.0 MB although the size my main application is 1.5 MB, so where all this size goes for?!
Like the previous poster I would recommend using Orca to inspect the package. It is included in the Windows Installer SDK. You have to know what it is required for your application to run. Mostly you need the VC++ runtime, data access components, 3rd party dlls. If your application is managed you can add ~20 mb for the .NET 2.0 runtime. The .NET 3.5 redistributable ia about ~200Mb. The client profile is about ~70mb, which maybe answers your question. Consider using web downloaders, which would download and install .NET runtime on demand.