1. we don’t have recommend image size. because we also have option to make navigation bigger. but if you want to replicate our demo page, you may interested to see this image : http://jmagz.jegtheme.com/wp-content/themes/jmagz-theme/public/img/logo.png . its 150×60 pixel image.
2. you can go to your wordpress admin panel > posts > categories > click edit to of your categories > Choose Your Category Layout (you will find your category layout you have been create right here)