Wetting a leather holster and then allowing it to dry around the pistol can help restore some stiffness and "shrink" the holster somewhat. This may be accomplished by greasing and wrapping the pistol in plastic wrap and then placing it into the well-soaked holster. Use your fingers to mold the wet leather closely to the pistol and then set it aside to dry. I've never heard of wrapping the wetted holster with anything.
Never oil a holster. Doing so softens the leather and, to work properly, a holster must be stiff. Milt Sparks sells a carnuba wax dressing (www.miltsparks.com) or appropriately colored wax-type shoe polish can be applied.