According to section 4.1 in the document "Getting started with Nokia Web Widget Development" the widget icon size should be 88x88 and PNG format:
My icon is a PNG and has the specified size but it's distorted nevertheless (both in emulator and on N78) and the result is looking like crap. Any idea to get it looking better? Is it possible to use SVG as the widget icon?Icon.png: Installed widgets can be viewed on a mobile device screen (Application Menu) through
a custom icon. An icon image must be in Portable Networking Graphics (.png) file format. The
size of the icon is recommended to be 88 by 88 pixels. If the icon.png file is omitted from the
widget installation package, the widget will appear with a default S60 application icon.