Web-safe colors would make the images look really bad unless they've low number of colors.
What do you mean by "size"? The image or file size? Assuming that you meant file size, for the optimum results you must go through each image manually by playing with the settings. For batch processing, you can't get the optimum result. image size vs. image quality.
Nonone can give exact settings for that optimum result because it varies from image to image. However, setting the quality bar to 50 - 51% usually gives the optimum quality/size for jpegs I think.
And yes, always use the "save for web" interface.
There is also lots of image optimalisation software out there that also decreases the size of the images of your site, various ones out there!
Try using google with keywords such as "image compressors" or "image optimalisation software" or "jpeg compressor" let your imagination go on this.
if youve got a recent version of photoshop, try switching to imageready which comes with it, and use the 'four up' to see how different settings stack up side by side.
On the Mac (asumming pc as well) - no need to open ImageReady, just choose Save for Web and then choose the tabs on the top left for 2 up, 4 up or Optimized
I always choose optimzed and move the settings around until I find the highest quality image vs the lowest size...
1. Resize the physical dimensions to the desired size first.
do this in photoshop by ...
convert to psd format
image > mode CMYK
image > resize > desired size
image > mode RGB
2. convert to a jpeg or gif
personally i think smartsaver pro (free trial available) is better at compressing jpegs than photoshop/imageready, just my opinion - both are good though
The best way to compress images is when your designing, not exporting! If you understand the limitations of gifs, you can design top 'header' style graphics with fewer colors and SLAM the size of your files down to a great level, and if you can design you will still have great looking 'containers' for your site.
Knowing about great exporting is one thing, designing around the constraints of something as great as the GIF file format is another.
As always if you are publishing photos - use jpgs, jpgs with similar color attributes (similar adjacent tonal qualities) will be even smaller.
* Think about a splash of CSS to control your fonts externally as well to contribute to the goal of faster downloads.
A tip that many use with Photoshop and web graphics when resizing is this:
1) blur image first
2) resize to desired size
4) save as web file (about 45-50 quality range for jpegs)
Note: this only works when resizing grphics to smaller dimensions.
This works beautifully for most scenarios.