To be more specific, it has to be a 32x32 16-coloured bitmap with the first colour in the palette being transparent. Keep that in mind, only 15 colours are displayed, 1 is never drawn. Forget about it and you'll end up with an icon full of holes.
This is also a very good method, as you don't have to worry about editing the MakeFile each time you want to make a new project - good thinking Rydian. I was about to recommend DSBuff, but people have very varied opinions on that software, so RomeR is just as good of a recommendation.
I think it only adds an entry to notify the user that the ROM image has been modified in case someone changes an icon for a commercial ROM, it's definatelly not something that would change the way a program works so I wouldn't really bother worrying about it. An icon is the least important part of a binary for the DS, some people don't even bother changing it from the default one.