Think of your 8-iron, 9-iron and pitching wedge as pure accuracy clubs. If you want to hit the ball close consistently with these short irons, grip down about an inch. In most situations, you don't want your short irons to fly too high and balloon -- typically a result of overswinging and trying to hit them too hard. This makes it difficult to control their carry distance, particularly in windy conditions.
Gripping down not only helps you make a compact swing, it allows you to better control the trajectory -- you want your short irons to pierce the air. Be sure you can see a piece of the butt end of the grip (see photo), and focus on swinging through smoothly.