Most of the move toward smaller film sizes reflected the needs of amateur photographers and photo-finishers - two areas where Kodak did make lots of money.
It was considerably easier for photographers to use 126, 110 and disk films. And it was far simpler for photofinishers to develop and print 126, 110 and disk films in high speed, highly mechanized equipment.
As an example, Kodak used to have to have human operators for the 35mm Kodachrome slide mounting machines, because people were regularly sending in films that they had shot part way, rewound, reloaded into the camera and re-commenced shooting the latter part of the roll, with there being inconsistent frame space between the early and late frames. Machines at that time couldn't handle that task reliably. That wasn't needed for 126 or 110.
As for the 620 spool cameras, some are like the Medalist and the Tourist - the feed spool compartment will not allow you to insert a shaved or sanded 120 spool - they are just too tight!
The Brownie Hawkeye's I've played with permit it, although I find the film advance to be more difficult than it should be.