After struggling with finding the correct location of the file to edit I found it here
Find this file in folder via ftp skin/frontend/default/THEMENAME/css/styles.css – my THEMENAME was rwd
Search for logo in the file – approx line 3267 and change the max-width and max-height from 300 and 90 to whatever.
On my store the logo was pretty small and unclear plus there was a massive white blank space next to it which looked silly.
To change the header blue bar from #3399CC to plain white in the same file go to header-language-background approx lne 3184 and change background -colour to #FFFFFF for white or check www.color-hex.com for other colours