These are my observations (used 1.6, now I'm using 1.7 under XP):
You can have undecorated frame of "almost" any size -- I use screen resolution of 1280x1024 (rotated) and didn't noticed any problems with frame 1500x1500, although some frames 2000x2000 look uncompleted (but work) and frame of 4000x4000 displays its thumb in taskbar but this thumb is unactive and the frame itself doesn't appear. I think the largest possible size of undecorated JFrame is dependent on system capabilities which is dependent on the graphic hardware.
With decorated frames there is a simple story -- they can be a little larger than screen size (by few pixels in generally).
In my application with size determined during runtime (e.g. games where you set board size dynamically) I use the following approach:
1). before packing set frame location relative to null. It places the upper-left corner of JFrame in the middle of the screen (before pack the JFrame is (0,0) dimensioned)
2). set preferred sizes of my frame content (I always use single JPanel) and remember them
3). pack the frame
4). if frame sizes after pack don't match those before pack dispose the frame, remove content's JPanel, add JScrollPane with this JPanel and set the preferred sizes of JScrollPane as JPanel preferred sizes PLUS the JScrollBar fixed dimensions (i.e. a width of the vertical scrollbar and a height of the horizontal one).
5). pack again -- this guarantees only the necessary scrollbars appear (if you don't increase the JFrame sizes then both scrollbars will always appear -- there is also a need to remove the JScrollPane default border).
6). set new location of the frame by moving it left and up by the half of the corresponding size to center it.