I always thought that was why I couldn't play the guitar. I tried lessons years ago, but found I just couldn't imitate my favorite rock and rollers. I consoled myself by taking flute lessons a la Ian Anderson from Tull.
I do play classical piano and don't think my hands are particularly small, but when you look at the finger joints on male guitarists, they seem very long compared to those on women. I had no idea that you needed large hands to play the pipes.
I'm not sure if you need large hands to play the bagpipes (specifically the GHB), but you need larger hands than mine - I can barely reach the holes on a practice chanter, much less a full-sized chanter.
WRT guitar, high-quality short-scale instruments are available, if you are still interested.