It really depends on your forum and what it's about.
Mine is a PlayStation gaming forum and so we allow sigs to contain 1 image with max dimensions of 550 x 125 px and 1 line of text. The image dimensions match those of the official PlayStation signature (portable ID) for those who want to use it, though many users end up creating their own sig image.
As I said, it depends on the site. Image sigs are quite important to users on gaming sites. Whilst some use the same sig image for a long time, many change theirs on a regular basis to reflect the games they are currently playing / favourite game. Others use image sigs from other sites with dynamic stats showing latest kills/awards etc.
Some sites could remove them as there is no real value whilst on others there is. Having clear rules ensures that if you do allow them, users won't abuse them and create hideously huge animated clutter.
I only limit height and amount of links. Usually around 250px heigh, and less than 5 links. It really depends on the site though, for example for a gamer site, I would limit it to the smallest available size of the most popular gamer card service used on the site.