Well, it not only needs to be 256x256 or smaller (in powers of 2), but the file size has to be smaller than 128KB to work as a spray. I'm not sure how many frames that is, but at 256x256 with transparency it is hard to get it under 128KB with more than 2 frames. Without transparency, 3-4 frames. So you might have to go down to 128x128 if you want a smooth animation.