Hey I had the same problem with the kindle touch, 600x800 .png files i had downloaded from the internet wouldn't work (some of them worked on my old 'standard' kindle, but its broken).
After a bit of fighting around, I discovered that Photoshop and other photo/image editing software couldn't open the pictures for some reason. Finally, I found pixelformer was able to open them, and when I re-saved them as a .png with pixelformer it worked fine. Must be some kind of wonky formatting issue, anyways, just wanted to report that there are some issues with the .png screensavers out there, but at least re-saving them using pixelformer worked for me
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