SQL Server virtual log size
A single transaction log file has both a physical size (that you see on disk), and it's also broken down within the physical file into logical sections called virtual log files (VLFs).

Both auto-growth and auto-shrink operate on the physical transaction log file.

Transaction log truncation (also called "log clearing") operates on the logical sections of the transaction log (VLFs), and does not affect the physical file size. This part is frequently the subject of confusion.

A log file must always grow to accomodate a large transaction; turning off auto-shrink will leave the log file with its maximum needed size, instead of physically decreasing its size.

If you don't have large transactions, it will be safe to disable auto-shrink; the log files will not grow without bound like would happen if the database was in FULL or BULK_LOGGED and you weren't taking transaction log backups.

This behaviour is the same for SQL Server 2005+.