John, there are two ways to set how big the file size of a typical picture is: How many pixels (800X600 is a good size for viewing on a typical screen) and also the level of compression (80% to 75% works well).

Not familiar with Picassa but there should be a place where you can set the compression before you save a COPY! of the reduced quality picture. 800X600 with 100% will be too big for most pics. A real hi-quality camera will need to have the size down around 110X70 with 100% compression, if you want it smaller than 128K.