Long-term chastity use does not permanently shrink your penis, no. Most people report that after spending months to years in chastity they take 24-48 hours to achieve "full" erections, but that's it. The penis isn't a muscle, it's a membrane. As long as you aren't injurying yourself, there shouldn't be any longterm sideeffects.
That being said, the longer you wear chastity, the smaller the cage you'll be able to fit into.