Use 72 pixels/inch for your resolution. The max width for a siggy that JM allows is 600 pixels, and if yours is any bigger than that then JM will automatically shrink it for you (which will make it blurry). 600 pixels is also the maximum height, but most people like theirs to be shorter than that so that they can put their blinkies and stuff underneath. So 600 width by 350 height (or somewhere around there) would probably be a good size to shoot for.
ETA: Also wanted to say

and point you over here if you're interested in participating in the first SSSC challenge!
http://www.justmommies.com/forums/f2...o-editing.html