Yes, they could all fit in Texas, but they would be drinking each other's sewage" ("World"). .
In a crowded environment, disease has a much easier time spreading throughout a population. Public schools are a prime example of this: when one first-grader gets a cold, every first-grader is pretty much guaranteed to share in the sniffles. This problem is exacerbated in crowded areas by increased pollution. Every year more than twelve million people die of disease carried by dirty water alone (Hinrichsen). Not only does the water in such places become dangerous, but the more-concentrated mass of emissions from things such as automobiles creates air that is so polluted, you can actually see it. Worldwide, over one billion people, one sixth of the Earth's population, suffer from dangerously high air-pollution levels, and up to 700,000 a year die from them (Hinrichsen). In Mexico City, the air pollution is so high that breathing it in on a regular basis has the same health effects as smoking three packs of cigarettes a day (Hinrichsen). It is so bad that they have a need for "fresh air booths" where you can spend fifteen minutes in air of breathable quality. Normally we would step outside for a breath of fresh air. In Mexico City, where there is a huge concentration of people, you have to go inside to get one.
Assuming that we can find ways to conquer these problems of pollution and disease to place everyone into a small portion of the Earth's land, we will still need land on which to grow food to support our ever-increasing population. Food shortages could become a problem very soon, as our population of hungry mouths continues to grow and the amount of land on which we can grow our food not only does not get any bigger, but actually shrinks.
According to a 1999 report by David Pimentel, per capita production of grain (which constitutes 80% of the world's food supply) has been declining since 1983.