My Spectro images came out a little pixelated (totally might fault for not playing with the images more) but I still love it. Here's what is suggested on their site: "Ideally images should be 300dpi but good results can be obtained with smaller images. If you want to upload one image to cover the whole MagicBand Skin, we recommend that your image be 2348 x 278 pixels."
I followed roughly followed the recommended size and saved it as a jpg I believe. Basically it's just something you gotta play with and make sure it's something you really like.