Texture sizes within UDK are required to be x2 to work within the engine. What I have discovered recently which benefits a lot of meshes that are particularly wide or tall is to have a UV map which isn't distorted to fit a square, but to use a rectangular UV space to map the object on to.
UDK accepts the standard 512x512, 1024x1024 etc. but can also accept anything from a 256x2048 to a more sensible 512x1024 texture.
*It's also important to note UDK has specific file types it can read for textures, each has different properties such as a 24Bit or 32Bit .tga file is hard to re-edit but can include alpha information, but a .PSD file can offer editability but long import times and large file sizes.
Here is a list of all accepted file types within the UDK engine, all using the same layered image but with different formats on export :
JPG: 2,6Mb
PNG: 3,6Mb
DDS: 2,7Mb
BMP: 12,2Mb
TGA: 12,6Mb
PSD: 24,6Mb
