As noted elsewhere, images uploaded into the game need to be powers of 2. (64, 128, 256, 512.)
However, it sounds like what you are doing is trying to get a picture for your profile, right?
Those display (at least on my monitor) at 182x137 px.
So, what I suggest is this.
1. In Photoshop, get the Marquee tool, and choose "Fixed Aspect Ratio." Type in 182 as the width, and 137 as the height. That will allow you to have the correct ratio for the finished picture, while letting you make the actual selection as large or small as you want it to be.
2. Draw a Marquee around the portion of your picture that you want to use.3. Choose Image > Crop to umm ... crop the picture.
4. Go to Image > Image Size, Disable Constrain Proportions, and change the Width and Height both to 128 pixels in the top portion. That will give you your Power of Two, and keep SL from resizing it for you. (Far less accurate than Photoshop's resizing.)
5. Go to Filter > Sharpen if desired. This step is optional, and some people don't like the look of sharpened pictures; but I find that it makes small things easier to see. If you don't like it, don't use it.
6. Save as a 24 bit Targa, and upload to SLThat should give you a nice, sharp image as your Profile Picture. (If you were talking about Picks, not the Profile Portrait, then use 290x164 instead. Or take a screen shot, and make sure that yours are the same aspect ratio as mine. They might not be, for all I know.)
On the other hand, if I misread your post, and you weren't asking about Profile Pictures, then just upload everything as a power of two, and you'll be fine. (You can use a different power of two for each side, so, for instance, if you had an aspect ratio that was close to 1:2, you'd want to use 128x256, for example. Textures don't have to be square, just powers of two per side.)
By the way, you can use this same general method to get anything sharp, and not suqished or blurry, in SL. Just use whatever numbers you need, for whatever aspect ratio you're looking for.