With the release of the 2.6.30 kernel we now have native support for Lempel-Ziv-Markov chain algorithm (LZMA) compression. This offers something like a 30% improvement in compressed size over GZIP compression (used for kernel image and initramfs compression). The downside is that decompressing LZMA data uses around twice as much CPU as compared to GZIP. Also compression is much slower than GZIP.
What does this mean for the kernel? Well for one it means it is not in the least bit obvious whether switching compression of the kernel and initramfs to this new compression format is going to be beneficial on average. Yes they would be smaller, but they would also take more time to extract especially on slow hardware. The key metric is the overall time taken to load and extract this pair and that is not easy to measure. Obviously we want to enable support for this new compression format, but making a change to that format will take more research and quantative comparisons.