When defining a brush preset, Photoshop will automatically convert your selection to gray scale to make the brush. You can use a color image to define a brush, but you might find it easier to convert your document to Gray scale in order to get a better idea of what to expect. If you are running a previous version of Photoshop, you will most likely be limited to 999px, if not less. If you are in CS2 or 3, You can make your file 2500 X 2500px. You may not need a high resolution brush, but what if you need the same brush to be larger 6 months down the road? It's always a good idea to make your brush as large as possible in order to use it for other projects later. It may be temping to have a file open and see something that you want to make a brush out of and do it on-the-fly within that file, but in order to make a brush knowing it is sized right, it's always a good idea to make a separate file to make your brush.

Whether you are using a scanned image, a photograph, or whatever, you need to set up your Photoshop file in a way that will give you the best results for your brush.

You all probably know that you can make a PS brush out of just about anything, so setting up your file correctly is key.

Photoshop brushes