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Either one of .bz2 or .gz work fine with GIMP's XCF files. You can even run the 'bzip2' or 'gzip' programs on the files outside of GIMP and GIMP will be able to open them.

The tradeoff between gzip and bzip2 is the amount of time spent compressing/decompressing versus the amount of compression achieved. Bzip2 provides better compression but is significantly slower.

Using an 150Mb XCF file as an example, bzip2 compression took 40 seconds on my machine while gzip took 13 seconds. And for decompressing bzip2 took 13 seconds whil gzip took less than 3 seconds. The gzipped file was 40% smaller than the XCF while the bzipped version was 60% smaller.

My personal preference is to not worry about compression unless the file size is rather large (e.g., greater than 20Mb), and to use gzip when I do wish to compress.

~

Not really. At least not more so than that possibility exists for the uncompressed file.

@Zeo

gzip and bzip2 are standard compression libraries used all over, there is nothing GIMP-specific about them and they are unlikely to fail or become invalid, certainly not anymore than gimp's xcf files themselves (as Saulgood points out).

Compression is common. Heck, many image formats, like .ORA (used by MyPaint and also available in GIMP) are basically just zipped archives of PNG images, one per layer.

As for this extra xcf.gz/bz2 compression though, I occationally have large-res images racking up in the hundreds of MB and I've never used it. Disk space is cheap.
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Griatch

Right, I think I should keep my .xcf files as .xcf...

I am asking this at first place because it is uncommon for image manipulation program to have file compression feature that compress its own native format...