I'm the opposite, I can't stand the thought of using 1.35GB for Animal Crossing when the game itself is only 20MB. The three important aspects you should consider in compression are compatibility, quality, and losslessness.
Compatibility seems self-explanatory, but certain systems only support certain compression formats. PS2 emulators support several different formats like CSO, ZSO, and CHD, but the actual system only supports (I think) ZSO. Gamecube and Wii have RVZ, which is an excellent format that you should absolutely use for Dolphin, but you're limited to other lossy formats on the real system (see below).
Quality in this context means "does the compressed version run at least as well as an original ISO". For CHD and RVZ, the answer is yes. But for ZSO on PS2, you may have to mess with some settings to get it to work properly. And for CSO, my experience is that it works fine where compatible, but using anything other than the lowest level of compression is never worth it; you'll save maybe 10 MB of space (if you're lucky) versus the lowest level but get longer load times.
Losslessness (aka "archive-quality") means "can you un-compress the game into an exact copy of the original". Not only does this ensure that nothing gets lost in the conversion process, but you can also revert back to the original ISO if needed, like if you want to apply a rom hack. Every format I've mentioned so far is lossless, but others like GZIP (PS2), WBFS (Wii), and any Wii U format besides WUD/WUX are lossy, meaning the compression is irreversible and may (but probably won't) have other issues.