Where to configure pg_xlog file-size?

Hi,

I am using postgres-8.3 on an embedded ARM9 system.
Works pretty well, except for stoarge consumptions.

The actual table data is rather small, but postgres creates 2 16mb
files in pg_xlog:
root(at)mesrv:/var/lib/postgresql/8.3/main# ls -la pg_xlog/
total 32820
-rw------- 1 postgres postgres 16777216 2010-04-12 15:00
000000010000000000000006
-rw------- 1 postgres postgres 16777216 2010-04-11 23:42
000000010000000000000007

Is there anything I can do to lower the size of those two files?
What are reasonable values for smaller databases, and if it can be
changed, what impact would it have on the system?

Thanks, Clemens