   alpha'ing background in program or photoshop
  which is better?it seems like it would just be easier to have all of you pictures andsprite sheets just laid over a transparent background in the file instead of having to do it in the programwhat are the benefits of doing it in program?are there any?   
  most defiantly have the alpha in the file. Its a native to all cards seen on the market   ;  I think what you're talking about is masking, not alphaing.  Alphaing refers to giving a pixel a variable opacity, a mask is on (draw) or off (ignore).In answer to your question, having an alpha channel makes a texture slightly bigger. However for contemporary hardware this isn't an issue.  As far as I'm aware nobody alphas/masks in the software these days unless it's on a platform whos graphics hardware doesn't support alpha channels (low end embedded systems might not support alpha, or quite old hardware.  I don't think the GBA had alpha support).   