The ideal ratio would be 1:1, given that all covers seem to be cropped to a square when the story appears in a list, even though the full cover is displayed on the actual story page. I'm not sure about the resolution, but there doesn't seem to be a limit - the site apparently doesn't alter the images that are uploaded, even when they're much greater resolution than is ever necessary for displaying the image on any page. You can observe both of these with The Gamer. The cover image is of profile orientation but is cropped to a square on the site's home page, and if you right-click on the image and open it in a new tab, it's at a much higher resolution than any monitor (let alone handheld device) would ever use.
Currently, the preview image is taken from the middle of the image. So you can take advantage of that if you want to use a square image. You can see that in the cover image of my story AW. In the preview image, it shows Tue, Wed, and Thu only but the full image shows 7 days. In any case, the height shouldn't be higher than the image is shown when your browser is in fullscreen. That way, the loading time is lower.
