Currently Being ModeratedOct 11, 2012 11:55 AM (in response to james stock)
Any of the Xcode 3.2.x download packages will work with Snow Leopard. You don't need the Snow Leopard DVD to install Xcode, but if you had the DVD things would be easier for you because you could install Xcode from the DVD and not have to download it. If you don't need to develop for iOS, Xcode 3.2.2 is 744.71 MB, which is a much smaller download than Xcode 3.2.6.
The Xcode binaries are huge because you're downloading and installing more than just Xcode. There are other GUI apps, such as Interface Builder, Instruments, Dashcode, and Quartz Composer. There are also command-line tools. And there may also be developer documentation included with the Xcode binaries. All that adds up.
Currently Being ModeratedOct 13, 2012 5:16 AM (in response to Mark Szymczyk)
Later on I guessed that the apparent size descrepency had to be for a reason. Turns out that with the (default) of Finder to not view all files ("defaults write com.apple.Finder AppleShowAllFiles 0"), opening the Xcode DMG does not display the (hidden) "Packages" folder.
Enabling AppleShowAllFiles results in seeing this Folder, which, of course, I had to drag to my Downloads folder. Then it works as expected.