[NiLuJe]

Yeah, B&W + dithering + PNG usually yields smaller and better looking covers.

(Enforcing letterboxing also helps prevent Nickel re-processing that file on display on *most* (but not all) devices).

The quality/banding aspect is less of an issue nowadays, as Mk. 7 devices do that on their own, and Nickel itself now does a semi-decent pass on its own on older devices. Results differ whether Nickel or RMSDK does it, though (i.e., KePub vs. ePub).

In any case, what calibre does will trounce what both of 'em attempt.

TL;DR: If you are actually letting Calibre generate the thumbnails, then, yeah, I wholeheartedly recommend B&W + dither + PNG + letterbox. (a.k.a., check all the things ;p).

Otherwise, as @davidfor said, don't let calibre do it *at all*.

(Of particular notice, a dithered JPG will look *terrible*, so, that combo is *bad*).