"It contradicts conventional evolutionary theory that early mammals were timid, chipmunk-sized creatures that scurried in the looming shadow of the giant reptiles."
Actually, your average dinosaur was not that big. The more well-known ones were very large, but I believe the average was around the size of a pony. It's also known that dinosaur eggs weren't that big either, so 5-inch hatchling isn't exactly shocking.
The only real discovery here seems to be that they found a new species of mammal that was larger than any other living at the time (although still relatively small, only about 3 feet long). This is hardly evidence against evolution.
It is interesting to have discovered this species of mammal and to learn that it was possible for them to become this large during the era of dinosaurs.
But perhaps it shouldn't really be all that surprising. After all, although often overlooked, the dinosaurs were not the first group of reptiles to dominate the planet. Well before the age of dinosaurs, there was an age of mammals, or more accurately, mammal-like reptiles (sometimes called paramammals). The most famous is the squat four-legged and sail-backed dimetrodon, which was within a group of called the pelycosaurs. Another is the edaphasaurus, which looked very similar but had a sail slanted backward at an angle. This group's heyday was in the Permian and they constituted 70% of the land based forms of animal life.
This does nothing to damage evolutionary theory. This is just the discovery of another intermediate form. All forms are intermediate forms. The shame is that humans will never be able to come close to completing the fossil record, for we can not dig up the entire earth's crust and sift through it. To find anything is a humbling thing, maybe even a gift from God.