TheSceneQueen, theres something cool called index
http://forum.toribash.com/showthread.php?t=29601
There should be some tutorials there, they probably all suck but that is what you get.
For size I recommend 128x128, 256x256 or 512x512 depending on what you want to work in. Some people prefer going in twice as wide as high and then resize it to normal sizes (example 512x1024 then resizing it to 512x512) this is because of the stretch you get when you are applying your texture to a sphere. There are head templates out there you can download that explains sizes and mapping.
The resolution is limited to the size, so just put it as high as possible. Save it as a TGA, PSD or JPG depending on what you prefer.
have fun.