If there were a spaceship that is 200m long when you view it at rest, and then the ship accelerated to about 87% of the speed of light, you would view the spaceship's length to be 100m. That is Lorentz contraction, but it is not a mechanical effect. It is purely kinematic - it's an artifact of the way we make measurements. The ship is not being crushed.
The passengers inside the spaceship would still believe that the ship's length was 200m because the body of the ship is not the only thing getting shorter. Everything inside the ship gets shorter by the same amount. For example, a ruler would get shorter by a factor of 2. Therefore, if people inside lined up a bunch of rulers to measure the ship, they'd get the value 200m, because from your point of view they're measuring something 100m long using rulers that are half their normal length.
We might wonder why the ship doesn't suffer any ill-effects from being squashed like this. If I flatten a soda can by a factor of two by putting it in a vice and squeezing, it bursts and crumples. Why don't the soda cans in the spaceship burst?
When I put a soda can in a vice and squeeze, the front and back of the soda can get closer together. If I had a ruler next to the can, the distance between the front and back, measured by the ruler, would decrease. But that is not so in the spaceship. The soda can shrinks, and so does the ruler, and so as far as the ruler and soda can are concerned, there's no contraction going on at all. You might be clever and say, "What if I put the ruler in the vice along with the soda can?", but this would not make everything shorter - just those two. For example, the vice has plates that are getting closer to each other when measured against the size of the vice.
The source of length contraction, and the intuitive problems it causes, can be traced back to our intuition about the relativity of simultaneity.
Let's consider how you would make a measurement of the spaceship's length. What you would do is lay down a giant measuring tape, and wait until the spaceship comes up to it. Then, right when it gets up to your tape, you would measure where the front of the spaceship is, where the back is, and subtract them to get the length of 100m.
The people inside the spaceship would object to this procedure. You have to be very careful about taking your readings of the positions of the front and back of the ship at the same time. The problem is that in relativity, "the same time" is dependent on your reference frame. The people inside the ship would say that your clocks at the front and back of your tape measure are not synchronized, and that you took your readings at different times, and that's why you erroneously measured their 200m ship as being 100m long. (In fact, they think your tape measure is marked wrong because from their point of view it is the length-contracted thing. The people in the space ship think that if your clocks were synchronized correctly, you'd have read 400m off your length-contracted tape measure.)
To get around this simultaneity disagreement, maybe you and the passengers agree on a different procedure. You'll set up a stopwatch, and measure how much time it takes for the ship to pass you. Then you multiply by the speed of the ship to get the length. Doing this, you still get 100m.
This time, the passengers still call foul, but for a different reason. They think your stop watch is running slow due to time dilation. In fact it's running slow by a factor of two, so you recorded half as much time as you should have, and incorrectly measured their 200m ship as 100m.
So length contraction is unavoidable and it's real, but it's not a matter of things "really getter shorter" or not. It's a matter of disagreement on how to measure lengths and times when you're moving in different reference frames.
What everyone will agree on is the proper time $\tau$ between two events, defined by
$$\tau = \sqrt{\Delta t^2 - \left(\frac{\Delta x}{c}\right)^2}$$
$\Delta t$ is the time separation between two events (you start your stopwatch, you stop it), and $\Delta x$ is the space separation between them. Different observers will have different time or space separations, and therefore different lengths of the ship, but this proper time (or for spacelike-separate events the spacetime interval $s^2 = -(c\tau)^2$) will be agreed on.
There's a nice parable at the beginning of Taylor and Wheeler's Spacetime Physics. Imagine two surveyors. One of defines the cardinal directions based on geographic north, and the other based on magnetic north. They would tell you different things when you asked how far north New York is of Los Angeles. However, if you asked them the total distance, you'd get the same answer. The surveyors have different coordinate systems to measure the same thing, and so the components of the separation are different.
In relativity "distance" becomes just one component of the spacetime separation, just like in space "north/south distance" is just one component of the space separation. Observers in different reference frames measure different distance components because they are using different coordinates for the same underlying spacetime events.