Texture size will affect how pixelated things will look. A larger texture size has a better texture resolution. 256x256 textures are the fastest. See this image once and you'll see the effect. On the left side is a 30x30 texture slapped onto a 64x64-quant space. On the right side is a 256x256 texture on the same 64x64-quant space. Even from just a short distance, it's hard to see pixelation. This screenshot is very old, considerably close to a year old. At that time, I didn't know how to texture things anywhere near as decent as I can now, hence the floor with little detail. This was my experimental level, a level designed only for experimenting.

Avoid using textures above 1024x1024 for compatibility reasons. Most cards on systems 4 years old can handle that. Always use the smallest texture size you can with the least amount of loss. Going anything finer than a 0.25 scale is not necessary and only becomes readily visible with a very small clip_near value (like 4 and under) and with a high resolution (like 1600x1200).