ADDITIONAL NOTE I mention Animation class (Animation.cs) fairly often. I didn't want to discuss all of that here. I will put up my code for the Animation class and go through it. I might not make sense until I put up the main game.cs as well. But there are many .xna tutorials for creating animations on the web. Please Google those tutorials if you need the help. I just wnated this to focus on building graphics. Even if you are an artist an not a programmer, this will hep you understand what a programmer needs so all you'll have to do is hand them your art work. ;) I can put a list of resources for people wanting to learn how to program.
SPRITE SHEETS
The max size of an .xna sprite sheet is the standard 2048 x 2048. (Which seems small to me, at least for world maps and things). I don't think there is really a minimum size for your sprite sheet.
These sheets generally should be saved as .png or tiff (for 3-D)
The best way to move through a sprite sheet is through an Animation class built in the .xna game itself. You can create a class that is designed to play certain animations and or move to a new sheet for really long 30 fps (frames per second) games. Most Windows Phone games run at 12, anything more is simply a waste because the phone cpu cannot handle it. But that means for a 'pretty' cell phone game, all you needs is 12 frames... as opposed to say StreetFighter4's 60 fps. Most .xna games run at 30-32 fps. So if you divide 2048/32 is roughly the size you can make your graphics for ONE row of a spritesheet. (This also happens to equate to 32 frames for a single row) Or a spritesheet that is 32 x 2048. A loooong skinny rectangle sprite sheet. (This could simplify things for people wanting to build a simple animation class.
You can make your Animation class run though an array that can take the entire sheet, 2048/32 * 2048/32. So one sheet row can hold a single frame of 64 x 64 pixels. If we stick to this formula, it will make hit boxes, programming and our animation class very simple to make.
One graphic at 64x64 pixels :
For my particular game and Aimation class
I'm using this formula.
A graphic i made for my test game at 32 x 64:
This has a simple two frame animation that uses an animation class I made for my game.
I could easily expand this to 32 x ; 96(three frames), 32 x 128 (four frames), 32 x 160 (five frames) etc...
If I really want to be fancy, i can create a graphic 64 x 64 of a player character or a boss:
Example:
It's a failry easy process. And because it's a multiple of 32 (32x2 = 64) it makes all of the previous math and Animation class (and eventually your hit detection and collision etc...) should fit fairly easy.
If anyone else has more reosurces/information or details e-mail me or post in the comments and I'll add it to this post :)