To answer your questions, I have used Netty in the past for personal projects. It was a toss up for me between Netty and KryoNet at the time.

Netty has exceptional resources and documentation, which is something KryoNet lacks.

Additionally, back then Netty was underneath Jboss so I could rely on active development with plenty of bug fixes / or support.

Netty was more actively developed.

Netty had a usage that was very logical.

I chose to use Netty at the time, it worked out great. Besides the time I was torn between the two I have never looked at KryoNet so my reply was purely my personal opinion.

I didn't consider Mina at the time because of I had heard that the API was going through serious changes from Mina 2.x to Mina 3.

best != easiest.

Also, if it boiled down to using a relatively high level networking API like KryoNet I would personally use Netty instead.

@OP I really see no problem with var args, they are convenient in some select situations.

Only things that really irk me with java currently are:
We need better a better alternative JNI.
Additionally, some of the java classes such as the one's involved with screen capturing are horribly slow (pretty sure, havn't looked into it in awhile).

Agreed.

I still use Eclipse Indigo and Intellij. I havn't tried Eclipse Juno much yet, but from what I've seen I don't need to upgrade any time soon. (However, I am a shallow person who only sees things skin deep, primarily women.)

I havn't looked at Slick, but I would presume that the images are in png format (considering php is kickass).

For the file it would be simple to just read a String and then just read the remainder bytes into a byte array and convert that to the image.

You could accomplish this pretty easily by using RandomAccessFiles (I would suggest FileChannels, however java 7 isn't as widespread as I would want to make that a requirement to play).

Might be a good idea to calculate the elapsed processing time and then sleep the remaining amount (cycleInterval - elapsed).  

Edit: Obviously you would bypass calling the sleep method if that calculated time was <= 0.