Capture for iMovie import
In general your iShowU HD capture size will be determined by your project aspect ratio in iMovie. Currently there are three: Standard (4:3), iPhone (3:2), and Widescreen (16:9)
Try to minimize any scaling as it will result in some quality loss. For example: scaling will occur if you capture at 16:9 but then insert the media into a 4:3 project. Ideally you want to capture at exactly the resolution of the iMovie project. If you can't or don't want to do that - try to ensure that the Aspect Ratio of the project and the media are the same. This will reduce the black banding (letterboxing) when you import the media.
iShowU HD Example
First choose a capture for iMovie pre-set.
If you want to maintain a 1:1 capture ratio (no scaling) Make sure your capture area matches your output video. Here we do that by selecting the Same as video size option from the Choose... gear menu.
Video format
The default compression codec is set to "Apple Animation". This produces better color than Apple Intermediate, at the expense of more disk space. We'll change it to "Apple Intermediate" because it (AIC) is slightly quicker than AA. It provides minimal compression to the recorded video and does not overly tax your computers CPU resources. It is also a good codec to use should you wish to do further edits to your recording.
Then choose your frame rate to conform to either NTSC standards (30 fps) or PAL (25 fps)
Additional notes:
You can capture whatever size you want on your desktop as long as you keep in mind that some scaling might occur. iShowU HD will scale whatever size you choose to capture to the output size. So there's nothing stopping you capturing a full 23" 1920x1600 display into a 640x480 movie - it's just that the final result might not be that viewable by your users.