Paint Shop Pro will allow you to resize the image. I think Windows Paint will actually do the same (somewhere in editing) but it can only work with bitmap (.bmp) images, which is a huge limitation. BMP's are extremely large compared to other image formats, so I wouldn't fool with them.
.GIF is a 256-color image format that helps cut down on the number of pixels that need to be recorded. It actually does this lengthwise, so it records the color of the first pixel and then a value of how many pixels in the same row are the same color, and so an and so forth.
.JPG (JPEG) is a variable palette variable compression format that is often used for high-quality images. It can also significantly reduce image size, but deteriorate quality with compression. It is useful for things other than windows (like photos, etc.) that don't have contiguous pixels of the same color.