They tried to set max dimensions, and people are arguing.
Personally, I think 300 pixels for the max height is perfect - any bigger than that, and it starts to take up the whole screen and causes more scrolling, especially for people with a smaller screen resolution. But if you keep the height below 300, I don't see why the max width couldn't be a little higher than 300... because then it still wouldn't cause people to have to scroll; it would just fill up more of the horizontal white space.
Nicksgal's siggy banner is 471 pixels wide, and it doesn't look big at all because it's so short. I think the problem is the people who go overboard on the width AND height and end up with these HUGE banners that consume the whole page... and the problem seems to be more with the height than the width, cause that's what's causing the scrolling issues.