Shrinking the log shouldn't, by itself, cause performance problems.

Once you've monitored for a while (few days, week), run some queries on the saved data, see what the max used space of the log is (the SQLPerf output gives you the total file size and % of file used. That'll give you a starting point on deciding whether to shrink and if so, to what size.

As for performance, take a look through this: http://www.red-gate.com/community/books/accidental-dba. Also Grant's book on performance tuning.