I have used photoshop for most all of my faces so I can help you out. Now I don't know if this size recommendation is the best option but it is what I use regularly and I'm very pleased with how my faces turn out. I use a 640x640px template with a resolution of 72. The facer creator is only 320x320px so it works best if you use multiples of that number. 320, 640, 960, etc.
When you save your files its normally a good idea to save as PNG. It's not the only file type that the creator can use but when you start making more intricate pieces you will want a lot of transparent backgrounds so you can stack layers on top of each other.
Feel free to ask any other questions you have, we would be happy to answer them.
Also, welcome to facing!