Below are the settings I often use on my projects:
usemixedcaseclassnames="off", if class names reach z the next name will be aa instead of A.
defaultpackage="", all obfuscated classes are moved to the default package.
overloadaggressively="true", multiple fields and methods can get the same names, as long as their arguments and return types are different.
optimizationpasses="3", number of optimization passes to be performed. This may vary from one application to another. Check the final jar size, when it does not shrink any further, stop incresing this value.
printmapping="./mapping.txt", print the mapping from old names to new names for classes and class members that have been renamed. Useful when exceptions happen.
printusage="./deadcode.txt", list dead code of the input class files. Gives you tips of code that is not needed.
The only classes I keep are those that extends javax.microedition.midlet.MIDlet. So, for best jar size, my MIDlets are placed on default package. This way all classes are found at jar root.