My method:
Big box in a shade I've never (so far) used, full-bright so its an even tone.
Stand in the box, in a nice shape, wearing a nice skin & hair, and the clothes I want to model. Take a bunch of photos in different poses. (I've started making my own hairs for this, and I'm using the Eloh Eliot skins a lot these days.)
Oh: don't use a hair that has transparency, if you can avoid it.
Go into the Gimp. Pick a photo, give it an alpha channel (Layer-Transparency->Add alpha), select-by-colour the colour of the box, cut. This leaves just my av in the clothes, on a transparent background.
Select the av (in a rectangle select that's fairly close to the edges of the bit I want), and paste into my display image template. Scale and position her (or him) into a nice-looking position.
My display image template looks like this pretty ASCII-art:
*******************************************
* PRICE______________________PRODUCT NAME *
* __________________________supplemental info *
*__________________________________________*
* Package__________________________________*
* contains__________________________________*
* all this____________________________________*
* nifty stuff__________________________________*
* _________________________________________*
* _________________________________________*
LOGO__________________________________Copy *
GOES________________________________Modify *
HERE_____________________________No Transfer *
********************************************
Only it's square, and those horizontal lines are actually blank white space for pictures.

There's space on the right and at the bottom for any more things people might need to
know about the particular product, and there's plenty of room in the centre for nice clear product images.
Each segment is on its own layer. Permissions on one layer, package contents on another,
price on a third, title and supplemental on their own layers. Even the logo and border have their own layers, which came in handy when I decided to make a more 'masculine' border for male-specific clothing (rather than unisex stuff).
I use a white background, because for anything other than white clothing, white shows it well. (Alas, I just made a set which includes a white shirt - this should be interesting to model!)
This template also works well for OnRez and SLExchange sales: just de-visual the info stuff and maybe rearrange or rescale the product image to make it fill that now-empty space.
Edit to add: I'd like to reinforce what Rachel Darling said. 512 is MAXIMUM. You won't sell a damn thing out of a grey panel, and customers won't wait for all your lovely 1024s to rez.
Edit to add: To make a new text layer in the Gimp, select the text tool (big bold A), and on the Layers dialog, select a non-text layer, such as the background. Click in the image with your text tool, and it will ask if you want to make a new text layer.
Enter your text. The text layer will be somewhere awful, but that's okay. Go to the tools menu, and select the 'arrange' tool - the box with arrows pointing out of it. Click on whatever part of the text layer you can see, then use the align and distribute tools in the 'arrange' tool's options box to position the text layer. It takes some getting used to: 'align' will move to an absolute position, 'Distribute' lets you choose a numeric offset and then click the arrow buttons. Play with it for a while.
I use the 'arrange' tool for my text layers because, annoying as it is, once the text layer is positioned I can then change the text with the text tool without the Gimp #*$&^-ing clearing all my settings for the #@$97-ing layer.