Interesting, because I've always seen the hobbits as being so insular that they wouldn't need any conspiracy forest to keep them inside the Shire: it was such a paradise (and most hobbits so "boring") that nobody felt any desire to venture outside. Bilbo and Frodo were very much viewed with suspicion for their world-wandering ways, after all.
I always assumed a component of the forest was a way to keep Hobbits at home and home with the Hobbits.