Very small gears can be successfully cut using the Involute Gear Generator - "Involute and Cycloidal Gear-Wheel GCode Generator" The attached photo shows a tiny pinion sitting on my little finger. It was cut using 1/32" end mill. It is driving a 60 tooth wheel giving me a one step reduction from minutes to hours in the time train of a clock.
The programing people have put out version 3.001 and changed the program name to "Gear Wheel Designer" it has some really nice improvements that eliminate most of the editing in the gCode. Its now pretty much plug and play.
http://www.realhamradio.com/gearhome.htm