Im a big denim geek, so here's the educated low-down.
When I'm talking about denim here, i'm talking about GOOD, premium denim - and that means Raw/Dry denim. But, denim comes either sanforized or unsanforized. The sanforizing process was developed to reduce the amount of shrink that happens to the denim when it gets wet. However, some people (me included) like their denim to be as natural as possible when we start to wear it, and so we stick to unsanforized jeans.
Typically, when i begin to wear a new pair of jeans, I put them on and lie in a bath full of tepid water and then let them air dry whilst still wearing them. Therefore they will shrink to my body contours and produce the perfect fit. Unsanforized jeans will shrink up to 2" in the waist and up to 3" in the leg. Similar to Levi's Shrink-to-fit styles. However, the mass production of Levi's jeans brings their authenticity into question, and while they may be marketed as shrink-to-fit, they still won't have the same shrinking qualities as premium, unsanforized denim. Yes, I know Levi's started the whole denim thing off, but these days, in my opinion, there are denim brands that have far excelled the quality of Levi's.
My advice would be to throw away your Levi's and try shrinking a pair of jeans that will give you the results you're after. Brands that make unsanforized jeans that will shrink like a b*tch are usually Japanese, Japanese influenced brands, or simply had their denim spun in Japanese mills - The Flat Head & Co. (my personal favourite), The Strike Gold, Samurai, Iron Heart, Pure Blue Japan, and Roy are to name a few. They all do classic style, 5 pocket, 5 belt loop jeans that will look like 501's but perform on a much higher level that Levi's, and they will be clearly marked as "un-sanforized" when you buy them.
So... Raw, unsanforized denim. Before day one of wear lay in a tepid bath for 20-30 minutes and wear them dry in the sun. They should shrink up nicely to whatever contours your body has. If you want to go the whole hog, after your first initial soak don't wash them again for another 6 - 9 months, and then soak them in a bath with a bit of detergent. Repeat every few months. Your jeans will have developed unique fades and stress marks that no other pair of jeans on the planet will look like.
Long post, I know. I'm just a denim nerd.