I save as .tiff format because you get a great alpha mask that you can select only the rendered figures/objects with. Great for compositing images. As for render size, I usually go with atleast a 1200xwhatever image. A larger image is better, even if you have to scale it down, because more detail is retained. Shadows.... the render itself dosen't cause bad shadows, what you need to do is adjust the map size on the lights, and turn the shadow value down from the default 1. I use a 2048 map size and .3 shadow value.