Did a quick comparison of some Linux compression options. I created a tar file (no compression) of my entire /usr/share/doc directory. It's just about 189 megabytes for the whole thing.
doc.tar = 197314560 bytes doc.tar.gz = 68900135 bytes doc.tar.bz2 = 59759701 bytes doc.tar.rz = 56659057 bytes doc.tar.7z = 55134551 bytes
I've found that some compression algorithms are good for text, bad for binary. Example is the kernel.org sources, which are about 37 MB, but expand out to 300 or so from bz2. But then there's binary files that are uncompressed 150, compressed 150 or higher, on bz2. Times like that, I just use the regular tar, as you mentioned. .tar.gz is a good trade-off, speed and compression wise. I've found that I can just .tar.gz a group of files, and the time saved from using .tar.gz over .tar.bz2 will allow me to start uploading faster, and maybe be done by the time the bz2 finishes. ;) Live long.