I wouldn't say that it "depresses" him. He probably recognizes the kennel as a safe, resting place and chose to go there because the thundershirt would have been causing him to relax a bit more.
The thundershirts apply gentle pressure on certain pressure points on the dog's body, and it causes the dog to feel secure and more relaxed. I know I have customers telling me their tiny, little dogs won't stop shaking without their thundershirt, and I have used it on my dog when travelling in the car. It makes her not want to claw her way under the seats.
I was talking to a groomer about it, and she knows how to use the T-Touch on dogs, and she says the thundershirt has a very similar effect. It just helps relax the brain, and allow the dog to assess situations better than just reacting in fear.
So I wouldn't be concerned about him laying in the kennel - dogs tend to sleep most of the day anyways when they are feeling relaxed and secure, and the kennel is likely where he feels safest. If he's nipping at your son, he's likely insecure around him (children tend to be unpredictable in their actions, and it tends to freak small dogs out), so the kennel is probably a place he knows that he won't be bothered, and he went there with the shirt on because he was feeling a bit more relaxed and wanted a quiet place to relax.