well..here is my .02$
the 1GB card that I sent isn't the fastest. I don't even remember the brand name on it. It works. I do have the exact card from Newegg that i linked you to earlier, the SanDisc Ultra II. This card is, to me, SOO much better. The camera seems to operate smoother when compared to my 1GB card that I had. You really only notice this when you are shooting in burst mode (i shoot RAW+JPG in the highest settings), but the Ultra II handled it great. The second point in my decision to get the SanDisc is reliability. To me, NOT losing my pictures was worht the extra 25$. I have no proof that any other brands do/do not mess up, but the feedback on the sandisc cards are excellent...so it was a piece of mind thing.
I hope that helps a little.
I don't know the max size of the CF card, but I am guessing it is either 4GB or 8GB right now. Also, i NEVER updated the firmware on the XT....just never needed too. If you wanted/needed to do that, it might also include a capacity increase, you would have to go read the release notes though to find out.
BJ