Making sure your pictures look great on etsy can be tough, since the "list view" has pictures cropped to even squares and the "gallery" view has pictures cropped to wide rectangles. But if you use this photoshop action (or just follow the steps on your own) your pictures are pretty much guaranteed to look great in both shop views.
For treasuries and front page features, etsy always uses the gallery view -- so you want your photos to be cropped to look their best in this setting. I've found that if the sides of your picture are missing a little in the square view, it's hardly noticeable and doesn't take away from the image. But if your top and bottom are cropped out, it's usually VERY noticeable and detracts from the item.
So here's what you do:
1000 x 806 is the exact ratio of a gallery-sized photo, and reducing the size to 600 just makes the upload process go a little quicker. It's also a good size for uploading to your blog or facebook.
I combined these steps into a photoshop action (aka one of the best computer inventions ever!!) so that I just have to hit the play button when I open my photo and POOF! it's magically resized!
If you'd like to download the action, just right click on the file and save it to your computer: