I touched on this a little bit earlier in the thread, but when you load an image and keep the boxes checked for "No max width" and "No max height", Spritecraft will turn every pixel into a corresponding block, so if you load an image that is 300x400 pixels, it will create a schematic using 300 by 400 blocks, which is HUGE. You can uncheck "No max width" and "No max height" and enter them automatically. For a 300x400 image, you could just set "Max Width" to 40 and it would scale the image down to 30 blocks by 40 blocks (although this will not look good). Using the max width and max height boxes you can set the image to however many blocks you want.
For best results you may want to resize your image outside of Spritecraft anyway in an image editor. Just set the image size to the number of blocks you want to use. Also make sure you crop out any extra around the sides that you don't need.
Another thing you can do is go into the "Options" menu and set the option to "Top-View". When it exports the schematic, it will be horizontal so you can lay it flat instead of up and down. This is how I was able to create the huge image of Notch that you can see in this thread.