There's nothing wrong with a 42 meg file, a CD can hold 700 megs. I'de go with at least 300 DPI, you will notice a difference when you look at it around 2-4 feet away. In photoshop, just set your canvas size to about 1 inch larger than your artwork so you have room for error when trimming. You can make it whatever resolution you want it will still output the actual size, just don't mess with the resolution after you've started designing it.