Calibre is good for a lot of things, but I wouldn't use it for creating an original book. I use an HTML design app called Dreamweaver to create my HTML files. Then like you do I use Sigil to manage these files and to compile them into an ePub. I don't feed the ePub directly into KindleGen though, instead I unzip the ePub, tweak the OPF file a bit, then feed the OPF file into KindleGen.

For covers I typically use a 600 x 800 px image saved at 300 dpi. I realize that is smaller than some device screens like the new Kindle Fire, but it seems to work fine.

EDIT: The Amazon Kindle Publishing Guidelines recommends covers be 600 x 800 px (p. 10) and that images be saved at 300 dpi resolution (p. 14).