OK, so after reading a few docs and some older system specs... I think I'll stick to
16x16,32x32,64x64,128x128 Images for Sprites.

My only other problem is (I'm confused) . If my game resolution is 640x480 ... and for now I've created a background image for the menu that is also 640x480 (but according to the Andorra 2d faq it's not efficient since it must be the power of two so it will be upscaled to ... 1024x512 ... and that is a lot of waste) ... how do the pros do this ? when they wanna fill the screen ? with a static hand drawn background... should I chop this image into
256x512
256x512
128x512

Even so I'm wasting the bottom 512-480= 640x32 )

Or should I use a 512x512 resolution for my game...and strech it to 640x480 ... but that would look really bad no?

I need a bit of help about this

Thank you

Rob