[greatant1337]

I am thinking that is overkill as the textures are local and dont need to be downloaded - also a good png optimizer will probably be my friend i am guessing?

I read somewhere in the wiki that when Textures.xpr is created it compresses all the images itself using some fancy xbox optimised image code. This negates any file size optimisation on your end. Not sure how it works now XBMC is cross-platform.

I think it's ideal to have your image dimensions be a "perfect-square". I might have the term wrong, and it's probably best to look this up in the wiki.