You can change the quality of thumbnails in Windows 7 and make a custom settings. The size can be changed easily by selecting from drop down menu in the extreme right top corner; but, you have to follow a trick to change the quality of the thumbnails.
Regarding size, here is a screenshot of default sized thumbnails:
You can change it easily:
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Problem is that, when you browse a folder with lot of pictures, it takes a long time to load them. You can easily reduce the time by decreasing the quality a bit. Here is how to do it.
Step 1
Click Start button; type “regedit” (without the quotation marks) and hit enter from keyboard:
It may ask for security prompt, just accept it. Registry editor will open.
Step 2
Find the following string:
HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Explorer
Right click on the right sided pane and Create a 32 bit DWORD value called ThumbnailQuality, and set the value between 50 and 100:

Double click the newly created value; i.e. ThumbnailQuality. Put any value between 50-100:
Step 3
99 percent work is done. To make it effective, you can either restart your computer or restart the explorer.
Note: You practically not see any change in quality of thumbnails if you are not using biggest sized thumbnail for preview; but will soon discover it is working by increase in thumbnail loading speed.

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Good information, as always, and a nice tip.
I would caution anyone to always create a backup prior to any registry edits — even an addition such as this.
Keep up the great work, Abhishek
Thank you very much Corrine for the appreciations and the link.
Yes, I agree, I missed a big point which your experienced eye caught: Take a backup before hand.