Photoshop is perfect, if you’ve got it. But the main thing to know is that graphics must be 24-bit BMP files. There may be a theoretical file size limitation, but it’s nothing you’ll have to worry about at this resolution. I haven’t hit a maximum number of files, either. However, I’ve been making most of my recent animations as film strips, where all of the frames of animation are combined into a single, tall graphic.
Obviously this needs a major FAQ treatment. I’ll write up a sticky post tomorrow. I’m exhausted at the moment.