shrinkdatabase will not shrink a db less than it's minimum size, where minimum size is defined as (this is from books online)
The minimum size of a file is the size specified when the file was originally created, or the last explicit size set with a file size changing operation such as ALTER DATABASE with the MODIFY FILE option or DBCC SHRINKFILE.
I'm not sure exactly how the system extends TEMPDB but if it does an explicit ALTER DATABASE then it may be changing the db minimum size.
I've found the best way to force TEMPDB smaller is to use DBCC SHRINKFILE, eg in query analyser with tempdb as the current database
dbcc shrinkfile (tempdev, 3)
tempdev is the logical name of the tempdb data file (select * from sysfiles will show you this), the second parameter is the target size in Mb.
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