Just to follow-up in case anyone comes across this in a search, here's the answer I got.  In brief: it depends.

The first queue holds data that comes straight from the file/source.  The size of those buffers is generally what the 
streamer suggested, possibly rounded up to a multiple of a frame (for formats with a fixed frame size).  For regular 
files accessed via the filedes streamer, I think that will be around 32K.

The second queue holds decompressed data coming from the decoder.  The buffer size here is in general up to the decoder.
  It should be OK to set the queue2 size to two or three unless some of your decoders have trouble delivering data at a 
consistent rate, either because the format is such that some frames take longer to decode than they take to play, or 
because you're running some higher-priority stuff that preempts the decode.

Things may be more complicated if you play video rather than just audio.