These are my settings:
The files can get very large. I went a bought a 2T drive just to store my raw FRAPS footage while recording. For 1.5 hours of recorded footage, my file sizes are around 200G.
30 mins of recorded footage, can be 60G upwards.
Once I finish recording, I get rid of the files where there was no action. The ones I want, I go and create the clips I want with Sony Vegas, and then dump the raw file once I am finished with it.
The "Full Size" setting will give you HD results. But if you are concerned about file size, then go with "half size", and you could even reduce the FPS number to record at, to reduce the amount of data recorded. The end result will be that your video will not be as detailed in picture quality.
The reason I use Num+ for recording, is that I use TrackIR for freelook and zoom. You may wish to consider an alternative hotkey, as the Num+ key is the zoom key in Arma 2, and could cause problems if you use that key often to zoom. Your recording will be constantly stopping and starting.