This question about zip bombs naturally led me to the Wikipedia page on the topic. The article mentions an example of a 45.1 kb zip file that decompresses to 1.3 exabytes.>
A nice way to create a zipbomb (or gzbomb) is to know the binary format you are targeting. Otherwise, even if you use a streaming file (for example using /dev/zero) you'll still be limited by computing power needed to compress the stream.
A nice example of a gzip bomb: http://selenic.com/googolplex.gz57 (there's a message embedded in the file after several level of compression resulting in huge files)
Have fun finding that message :)