There isn't a way to make the pictures bigger as that is the size of the file sent from your buddy.
As for the second part (sorry i missed it when i first read your post) there is a file that remembers all that info (it's the same file that iChat uses) but i don't know where that file is sorry.
In 1.0b, there's a Clear Recent Pictures in the contact list image picker dropdown. I don't recall if there's UI for it in 0.89.1.
The recent pictures are stored in ~/Library/Imagaes/iChat Recent Pictures (it's an Apple-determined location for a systemwide control... weird, I know)