I agree with samjohn. However, I would note a couple of additional factors.
Some people have fatty liver when they get on paleo. If so, what they may be seeing to some extent is redistribution of fat from the unhealthy deposits in the liver to less unhealthy subcutaneous fat. That would result in a decrease in waist size with a slight and likely nonmeasurable increase in things like arm and leg circumference.
Also, many bathroom scales are pretty inaccurate, so you might be losing some weight without knowing about it.
However, it does stand to reason that with the substantial improvement in protein quality on a paleo diet, the equilibrium amount of muscle would be slightly higher with the same exercise (which might be zero exercise).