how can I auto resize the logo? so that when someone changes the size of the window, the size of the logo changes also.
To put it simply, there's no simple or good way. It's the reason why no website (at least the thousands of ones I've browsed) have dynamically sizing logos.
The simplest method would be to stick CSS % width/heights to the IMG, but that has a few issues (ie distortion of aspect ratios).
so its better just to have a small logo that blends with the background, but doesnt mess up when the window is resized?
Simply, yes.
You can do it in flash, but it isn't a good idea and has its disadvantages...