Randall, the size of a photo is only limited by your hard drive space. PAF only stores a link to where the photo is stored on your hard drive, so the size doesn't concern PAF. However, if you decide at some future time to transfer your file to a relative, you have to transfer the photos separately. Then size may be important as some ISP's will not accept attachments over a certain size.
When printing your reports you can set the physical dimensions of the photo to be included in your PAF report. Click on PHOTOS when in the PRINT REPORTS screen and you will see the tools there to set the size.