Originally Posted by Peckish

I'm assuming that since you're concerned with needle size, this means you are machine appliqueing? Are you also using fusible?

The problem with changing your needle is that for best results, you really need to match the needle size to the thread size. What kind and size of thread are you using?

I agree, the holes will close up with washing. If you don't want to see them as you're sewing, I've found that steaming the holes helps. So does spritzing lightly with water and kind of massaging the fabric. Make sure your fabrics are colorfast first (hopefully you've already tested for colorfastness before sewing).