Saving in a compressed format like jpg will give you a smaller file size but it will display the same large size on screen. You also lose a little quality if you want to print at photo quality.
You control the size of the scan with the DPI (dots per inch or pixels per inch) setting. Never go higher than 300 DPI if you are scanning photos. A photo taken with a fixed focus Nikon 35mm camera on a tripod will give you a photo that you can get 300 DPI from. A hand held point and shoot APS camera is probably closer to 200 DPI where you start spinning your wheels.
http://www.scantips.com/basics08.html Go to the next page where he demos some scans from a Nikon tripod photo.
The driver software that you use to scan is specific to the brand of your scanner. There is a lot of aftermarket software to enhance the photo after you scan though. You probably got something like Photoshop Deluxe or Picture-It with the scanner. Whatever image editor came with the scanner will probably do you for a while. Which scanner do you have?
If you dont have anything then download Irfanview from
www.irfanview.com It is a great viewer and not intended to be an image editor, but you can at least crop and change the size of the image. It has a few more simple editing functions but nowhere what you would get with even a basic image editor. You can use it for the huge images you have already scanned. Go to Image>Resize/Resample and you can change the image size. You can also have it save the image as a jpg.